Exclusive data shows Hobart’s top investor hotspots

Investors won’t need to travel far from Hobart city to snag a perfect property as the majority of the best suburbs are located within 20km of the CBD – some even closer. SEE THE TOP 10 HOT SPOTS >>

Jarrad Bevan

@JarradBevan

5 min read

August 9, 2021 - 9:33AM

Property values rising in outer suburban and regional areas

HOBART’S budding property investors would do well to skip the glamour markets and head outside of the inner city, new research has revealed.

Of the 10 suburbs identified by realestate.com.au as Hobart’s top spots for investors seeking rental returns and capital growth, none were located in the centre of town.

However, investors won’t need to travel far to snag a perfect property as the vast majority of the best suburbs are located within 20km of the CBD – some even closer.

The property portal’s analysis was based on three key metrics – rental yield, 10-year capital growth figures and rental demand with one Hobart northern suburb coming out on top as the only area to rank in the Top 10 twice with its strong unit and house markets: Claremont.

Claremont cracked the Top 10 for houses and units.

Variety, convenience, proximity to the city, Claremont has it all.

Claremont units were the only unit market to crack the best of list.

Houses in Claremont are returning a rental yield of 5.2 per cent, well above greater Hobart’s yield for dwellings (4.1 per cent) or the national average at 3.4 per cent.

Unit yields were stronger still at 6 per cent.

Claremont’s 10-year median growth figures are substantial, per REA, at 83 per cent (houses) and 75.2 per cent (units).

Realestate.com.au measured “demand” through unique, engaged rental searches, inquiries with agents and booked inspections over the 12 months to June 2021. Claremont’s annual demand growth figure was 4.8 per cent (houses) and a 23.1 per cent (units), which was the highest of the 10 suburbs.

The next best demand suburb was Kingston at 10.5 per cent and West Moonah at 9.5 per cent.

The largest change in pricing was in Risdon Vale with a 101.1 per cent increase over the decade closely followed by Rokeby at 100 per cent.

The suburbs with the largest rental yields were Bridgewater 6.2 per cent, Risdon Vale 6.1 per cent and Claremont units 6 per cent.

Paul Ryan, realestate.com.au economist, said while investors will individually value metrics in different proportions, demand was a good barometer of how sought after an investors’ properties were likely to be.

“Having periods where renters are not in properties can be costly,” he said.

“Capital growth has trumped rental yields of late, but that may not always be the case. Moving forward, I suspect investors will be more focused on yields if the capital gains returns can’t continue the way they have been.”

Mr Ryan said a lack of units on the Top 10 list was not surprising in the Hobart market as there was huge demand for larger dwellings.

“People in Hobart still prefer houses and that’s why they have done better in price growth over the past 10 years,” he said.

“Rental yield tends to be a bit higher on units, but houses aren’t that far behind – there’s not much of a gap.

“Unlike Melbourne or Sydney, nowhere is that far from the city in Hobart, and people don’t have the congestion or traffic that makes inner-city apartment living attractive in other cities.”

More investors in the market would help with the rental crisis, says REIT president Mandy Welling at Hobart. Picture: Chris Kidd

Real Estate Institute of Tasmania president Mandy Welling described investors as a key cog in the property market wheel and vital in addressing Tasmania’s dire shortage of rental properties.

“Investors are terribly important to our marketplace,” Mrs Welling said.

“It comes as no secret that we have a substantial shortfall of rental properties across our entire state, and this has been the case for some time.

“In the 2020-2021 financial year, we documented 2020 sales for the purpose of property investment. In 2012 that figure was 1049, so the numbers are increasing slightly but we still need more.”

Outer suburbs can offer the magical mix of great yields and growth, says LJ Hooker Pinnacle Property partner Alison Rogers.

LJ Hooker Pinnacle Property partner Alison Rogers said while Hobart’s hotspot were “outer suburbs”, they offer proximity and an easy commute to Hobart’s CBD.

They also have easy access to shopping centres, transport, good schools and in many case water views, she said.

“All of this leads to investors noting a high level of occupancy and opportunity for capital growth while a yield is still attractive,” she said.

“House prices in these areas provide good value for money and solid rental values.”

Mrs Welling said the Top 10 featured suburbs where there has been significant development over the past 20 years.

A standout, she said, is be Rokeby with new developments from the waterside across to the Mornington end, at Glebe Hill and towards Clarendon Vale.

“The creation of new homes will always give way to the potential for investment. Good depreciation and low maintenance investment properties are on offer with this type of purchase,” she said.

Prepare before diving into investment

PROPERTY investor Jane Clark has an expert tip for anyone thinking about dipping a toe in the landlord waters: get your finances in a row first.

Mrs Clark, 60, and her husband Chris have owned a score of properties over the years — some fixer-uppers, some they lived in or rented out — and along the way she learned not to invest in a house if it will cause stress.

Always do your research before making a move, says investor Jane Clark. Picture: Chris Kidd

She is a financial advisor by trade and says for beginners “taking a step back” and assessing your overall financial situation was a key to success.

“There’s no point in taking on a mortgage if you have heaps of other debt, even if you can get the finance approved,” she said.

“Some see buying an investment property as having “arrived” but in reality they can’t afford it.”

Mrs Clark said there was no right or wrong when it comes to what an investor may seek, from location to potential value growth to rental returns.

“What’s most important will change from one individual to the next. But one thing that applies to everyone is, try not to turn properties over quickly because that is costly,” she said.

“In an ideal world you would buy a property and never sell it, you’d use it to build a portfolio. It doesn’t always work like that.”

In a hot market like Hobart’s, finding an investment property where the maths adds up can be a challenge.

The timing right now might not be right, Mrs Clark said.

“However, in the near term, the market’s unlikely to become more affordable,” she said.

“Rental income alone, even two years ago, that wasn’t enough to pay a mortgage — especially when you take into account maintenance, overheads or some ‘cash dash’ for any issues that arise.”

Tassie’s Top 10 Investor Suburbs

Suburb, home type, rental yield, 10-year growth, annual demand growth