Rental returns rise puts Hobart at No. 1

Rental returns rise puts Hobart at No. 1

HOBART now boasts one of the strongest rental housing markets in Australia while continuing its status as the country’s most affordable city.

The latest CoreLogic RP Data housing index revealed Hobart houses enjoyed the highest rental yields in the country at 5.3 per cent, pipping Darwin (5.2 per cent), which has held the title since 2001.

CoreLogic RP Data head of research Tim Lawless said the signs were strong for the overall property industry.

“The relative affordability of the Hobart housing market, coupled with its lifestyle appeal and higher rental returns should revitalise the housing market,” he said.

Mr Lawless acknowledged tough economic conditions across the state and a lack of population growth had resulted in limited housing demand in Hobart. However, transaction numbers were up 1.2 per cent over the past year, suggesting buyers may be slowly returning to the market.

Real Estate Institute of Tasmania president Tony Collidge says the increase in capital gains and higher rental returns on local property was “pretty powerful stuff”.

“Suburbs like Chigwell, Rokeby, Bridgewater and Claremont have rental returns of up to 8 or 9 per cent because they don’t have the capital gains of places like Sydney,” Mr Collidge said.

Gains of 4 to 5 per cent are the norm in suburbs like Battery Point and Sandy Bay where they pay higher prices for property, he said.

Tenants Union of Tasmania figures show that the average weekly rental for a property in Hobart city was $395, the same as the previous quarter.

The cheapest area to rent in Tasmania was the West Coast, where weekly rentals averaged $163, up $8 from the previous quarter.

Hobart had the second highest level of price growth nationally in October, with its 1.4 per cent rise in dwelling values coming in behind only Adelaide’s 1.5 per cent.

Compared with the same time last year, Hobart’s dwelling values are up 3.8 per cent. The median house is now $341,000 and the median unit price is $275,000.

Mr Collidge said while 60 per cent of sales in Melbourne and Sydney were to investors, just 20 per cent of buyers in Tasmania were investors.

Sales in Tasmania are now averaging 1600 per month which has come up from the low of 1200.

“It’s picking up. We are miles away from the 3000 figure but it’s a really steady market, it’s increasing gradually, it’s positive and it all looks good,” Mr Collidge said.

Building approvals for new homes in September increased by 31.7 per cent in Tasmania, 41.6 per cent in Queensland and by 5 per cent in Victoria.

In other states and territories they fell – by 16.6 per cent in NSW, 14.9 per cent in South Australia and 8.9 per cent in Western Australia.