Regional Tasmania shines in the year that was

During 2022, the property markets in Tasmania transitioned into the downward phase of the real estate market cycle.

This may be due to the eight consecutive cash rate hikes that saw the cash rate rise from its starting position of 0.10% up to 3.10% – the highest since 2012 (see graph below).

But the upswing in property prices during the pandemic boom meant that property prices were still higher than they had been before that upswing.

For example, house prices in Hobart increased 52.2% during the upswing but only decreased 3.3% during the year to November, leaving them 47.2% higher than before the pandemic, according to Domain. But stand-out suburbs like Sandford, on the outskirts of Hobart, had an annual growth of 8.8%,

However, the picture was different in regional areas. Some suburbs experienced double-digit growth rates and no declines in house prices for the year to November. For example, growth rates in the top ten suburbs ranged from 13.2% to 24.4% (see table below).

In contrast, the suburbs with the strongest declines in house prices for the year to November experienced decreases ranging from 0.7% to 12.6% (see table below).

Rentals

Tasmania’s rental markets also saw vacancy rates fall to record lows. For example, Hobart’s vacancy rate remained below 1% for the entire year to November (see graph below).

Tasmania needs thousands more homes to satisfy rental demand and to increase its vacancy rate to between 2.5% and 3%, which is considered a balanced market. In the meantime, rents have skyrocketed.

For the year to November, the top 10 growth in rents ranged from 8.2% to 10.7% in Hobart and from 7.0% to 11.6% in regional Tasmania (see table below).

This low vacancy rate is good news for investors, because as rents increase so do their yields.

For November, the top ten rental yields in regional Tasmania (see table below), which ranged from 5.0% to 6.7%, outperformed the top ten rental yields in Hobart, which ranged from 4.9% to 5.5%.

Prospects for 2023

SQM Research managing director Louis Christopher has forecast that house price changes for Hobart in 2023 will range anywhere from a decline of 10% to a rise of 4%, depending on four different scenarios for the cash rate and the economy (see table below).

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Remember, this article does not constitute financial or legal advice. Please consult your professional financial and legal advisors before making any decisions for yourself.