If you’re looking to break into the property market with a savvy investment, you should consider the far south. Hobart, the underrated capital city of Tasmania, is quickly gaining traction as Australia’s next property hot spot. CoreLogic’s Hedonic Home Value Index report backed up what leading property investment lenders had been predicting with their May 2016 results.
Australia's most affordable city
Hobart has proven itself as a key competitor in the Australian real estate market with a comparison between the eight capital cities demonstrating strong figures. Hobart has claimed the coveted title of Australia’s most affordable city with a median dwelling price of $335,000, compared to Sydney’s $782,000 figure. Maintaining this competitive house price seems likely for the capital city, given that property values are on the slow and steady incline of 6.1% year on year, compared to Melbourne which has had a jump of 14% since May 2015.
- Sydney - $782,000 median price
- Melbourne - $590,000 median price
- Canberra - $580,000 median price
- Darwin - $519,000 median price
- Perth - $506,000 median price
- Brisbane - $475,000 median price
- Adelaide - $475,000 median price
- Hobart - $335,000 median price
Median House prices
Highest rental yield
An even bigger reason to invest in Hobart is the unmatched return on investment. According to the CoreLogic report, Hobart boasts the highest rental yields in the country. Houses reportedly earn a gross rental yield of 5.3%, while units showed a 5.5% yield.
However, despite the super competitive price values in comparison to the other seven capitals, the current residents of Hobart are not taking advantage of the abundance of property opportunities. Figures on domain.com.au demonstrate that 70% of the population are currently renting. This could be due to the fact that Hobart is a relatively young city, with the average age ranging from 20 to 39 years, and 72% of these describing themselves as ‘single’. This is a great opportunity for property investors looking for a rental opportunity as there is an abundance of potential tenants in the area.
A growing city
The City of Hobart’s capital works program has recently been approved by its council. The aim of the Transforming Hobart projects is to improve and modernise open spaces, paths, buildings and roads in the City of Hobart. The ten year plans allows for better forward planning to support growth and development of the area. The plan looks at establishing 22 parks and sportsgrounds, five retail shopping areas, six more buildings for offices and residences and 18 additional roads and cycleways.
Due to the currently investor-saturated property market, many of the big banks and financial lenders have restricted lending capacity for property investors. The latest housing credit growth figures show that investor housing credit has increased by just 7.1% over the past year, the slowest growth rate since November 2013. Due to this shift, lenders currently have slightly greater scope to increase lending to property investors than in previous years.
That said, lenders are now starting to focus their attention back on property investors and are reducing their investment property loan interest rates. Some as low as 4.04% for up to 90% of the property value on their investment property home loan.
If you’re considering your next property purchase or looking for investment property finance, using Mint Equity, a reputable mortgage broker, will provide you with a stress-free and straight forward experience.