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Inside the Hobart housing boom

Being a beautiful island state has never been so advantageous for Tasmania – and its capital city’s booming property market.

“There’s no doubt that we’ve been the beneficiaries of the pandemic,” explains Matthew Chugg, department manager of residential sales for Knight Frank, Tasmania. 

With their offices located in the heart of Hobart, just a Tassie Devil’s whirl away from the ocean, Mr Chugg has seen these benefits play out first hand.

Domain’s latest Housing Price report certainly bears out this theory, showing that Hobart housing prices hit record highs over the September quarter, with a median value of $555,754.

This represents a surge of 6.9 per cent from the June quarter, and a $75,000 leap since just last September. 

“I guess, being an island state, we were able to close down our borders quite quickly, and become insulated from the rest of the country – and the rest of the world,” Mr Chugg reasons, “so we haven’t really been affected as much as other parts. That’s had a really positive impact on our property market”.

Hobart’s housing is currently the third most affordable of Australia’s capital cities, with only Perth and Darwin having cheaper median house prices.

With the recent leap in demand, Hobart houses are tipped to become more expensive than Adelaide’s by the end of the year, with prices trailing the City of Churches by an average of just $9000.

Unit pricing tells a different story, however, with Hobart apartment values dropping 9.1 per cent over the September quarter, to a touch under $385,000 – a yearly low.

“That’s not what we’re seeing on the ground,” Mr Chugg notes. “It’s probably more around volume than price.”

A lack of international property investors can also be attributed to the unit price drop; a problem not impacting housing sales.

“We’re seeing the interstate purchases coming in pretty thick and fast at the moment,” Mr Chugg says.

“There’s no doubt that Tassie, and Hobart specifically, has probably been seen as a bit of a safe haven.

“Our climate, and all those other things we already have in place, have probably become more apparent through the pandemic. All that, put together, has created a bit of a perfect storm for us.

“It’s been pretty good.”

Knight Frank is seeing a lot of “sight unseen purchases” facilitated through virtual tours. Mr Chugg estimates these have increased in volume by around 50 per cent since the pandemic hit.

“Some of these people have connections,” he explains, “family or friends who live in the state who are conducting inspections on their behalf, so it’s a bit of a combination of things going on”. 

“They might even engage a professional, like a building inspector or an engineer, to have a look at the property on their behalf, just to give them the confidence in the property. 

“There’s been a bit happening [in order] to jump the hurdle of not being able to get here.”

Although he confesses he doesn’t own a crystal ball for the property market, Mr Chugg believes the growth in Hobart will continue past the pandemic.

“The only thing that will hold that back, is probably supply,” he reasons.

“Our listings have been pretty tight; they’ve been down as low as 30 per cent over this year, from the same time last year. There’s definitely been a lack of supply, and obviously demand’s been high.

“It’s the old rule of thumb, supply and demand drives prices, so that’s been another factor.”

One thing helping to satisfy the demand is an increase in land sales, helped along by governmental support.

“We’ve had a 75 per cent increase in land sales this year, and there’s been some major developments in the releasing of land, and new sub-divisions, so that’ll definitely play its part,” Mr Chugg predicts. 

“We’ve seen a huge increase in land sales this year. That’s been helped with the government subsidies, there’s no doubt about that. 

“I think that’s one thing that may support the growth in the residential property market – just having more land available – which we’re already seeing here in Hobart.”

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Nathan Jolly

Nathan Jolly was an in-house journalist with Elite Agent. He worked with the company from July 2020 to December 2020.