Homes needed to slow Tasmanian property price gains

The Hobart market has risen 26.8 per cent in the year to September. Picture: Roger Lovell

The regional shift popularised during the pandemic has put increased pressure on Tasmania’s housing market and caused both a price surge and tight rental markets.

Lifestyle chasers, investors and those looking to relocate for health security to the southernmost state have put increased pressure on the local housing supply, and current development activity is unable to keep up with demand.

As a result, property prices in ­Tasmania have risen at the fastest rate in the country over the past year.

The Hobart market has risen 26.8 per cent in the year to September to a median price of $659,622, up the equivalent of $170,563.

The CoreLogic data also highlighted rapid growth in the surrounding regions, with the rest of the state up a larger 27.2 per cent annually.

CoreLogic research director Tim Lawless said the market was proving unique, with the local unit sector one of the few nationally to be outperforming detached housing.

“At the end of the day, it probably comes back to supply and demand,” Mr Lawless said.

“Hobart really hasn’t had any supply response through the surge in population and the surge in demand for housing.

“I think you could broadly describe Hobart and regional Tasmania as falling into that lifestyle basket. (But) listing numbers across Hobart are also remarkably low, the lowest compared to the five-year average of any capital city.”

It is not just low “for sale” figures, with the state capital’s rental vacancy rate remaining the lowest in the country. Only 0.5 per cent of the rental pool is available, equivalent to just 160 properties on the last count from data house SQM Research.

Development is starting to catch up to demand, with Housing Industry Association chief economist Tim Reardon noting Tasmania had the strongest detached housing market in the nation before the Covid recession. Detached house approvals in the last six months have more than doubled the decade average, with the federal government HomeBuilder pandemic stimulus grants added to the state’s pre-existing economic revival to support local housing activity.

“The momentum Tasmania had heading into the pandemic has served it well,” Mr Reardon said.

“Strong house price growth and a very tight rental market suggest that this trend is likely to continue.

“The loss of overseas migration has not yet dragged on activity in the housing sector. This suggests that there was significant pent-up demand for housing in Tasmania. This is supported by the ongoing level of investor activity that remains a driving force behind this economic revival. The value of investor activity is now almost double the average of the past decade.”

On the ground, however, the new building isn’t being felt. Real Estate Institute of Australia president and local agent Adrian Kelly said the current building works did not make up for not building enough homes over the past two decades.

Deals are being made on homes within 48 hours of being listed and about one in 10 are sold site unseen to mainland or expat buyers. For every home being offered on the market rental, 10 to 15 groups are missing out. This is particularly impacting those trying to access cheaper, entry-level properties.

“Investors are still buying, just not at a rate to satisfy demand. We just don’t have enough properties,” Mr Kelly said.