Hobart’s rising real estate prices make it mission ‘impossible’ for young, single buyers

The number of first-home buyers is on the rise, but the market still feels “impossible” for young or single house hunters with some sales fetching six-figure sums above the asking price.

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AFTER getting an up-close look at just how high Hobart property prices can climb, radiographer Lucy Galloway is thrilled to have sealed the deal on a home to call her own.

The 30-year-old first-time homebuyer has snapped up a new build in New Norfolk.

And the property that made her head spin? It’s located in a traditionally blue-collar Hobart Eastern Shore suburb that’s on the rise.

“It was a three-bedroom, two-bathroom unit in Warrane that started at ‘offers over $380,000’ but was sold for $490,000,” Miss Galloway said.

“Sales like that are pushing people out of the market. For some it would be impossible.

“It is extremely difficult for single or young buyers to compete against the cash buyers purchasing property in Hobart. They are bumping our prices up.”

Lucy Galloway is thrilled to have purchased her first home, but has to look further afield as the capital’s prices continue to surge. Picture: Eddie Safarik

Miss Galloway said friends of hers had been knocked back 15 times, and offered way over asking prices, before securing a home. And while that situation is frustrating, she wonders “what choice do people have?”

Real Estate Institute of Tasmania figures for January to May 2021 reveal an increase in the number of first-home buyer sales compared with the same time last year.

However, their share of the market remains almost static.

The data show 650 sales in 2020 and 819 in 2021 over the five-month period.

While first-home buyers were up 26 per cent year-on-year, the market share was down a touch 0.2 per cent to 15.6 per cent. Second-home buyers make up 46.6 per cent of sales while investors account for 17.9 per cent.

For a few weeks while house hunting, Miss Galloway has been bunking with friends.

She sees Hobart’s high rents as another barrier stopping first-home buyers from entering the property market.

To find a rental close to the private hospital where she works would cost about $650 a week, she said, which would make saving for a home loan deposit difficult.

“I was lucky that an agent pointed me in the New Norfolk direction and to a home that was perfect for me. My mortgage will be about half the price of what I was looking at to rent somewhere near work,” she said.

When Miss Galloway got the good news phone call that her offer had been accepted, she said felt “elation”.

“It is a weight off my shoulders,” she said.

For young buyers, there is a challenge to be overcome around every corner, says Harcourts Signature Northern Suburbs property representative Mark Brudenell.

But there are tactics they can use, he said.

Harcourts property representatives Alex Spinks, left, and Mark Brudenell. Picture: Roger Lovell

Mr Brudenell said the lack of stock in the market and rising prices in building products making house and land packages more expensive were common issues first-home buyers face.

“Getting pre-approval for a loan is vital, it’s dreadfully important in the current market,” he said.

“Don’t pigeonhole the area in which you first thought of buying.

“The Hobart market is strong and places like New Norfolk – with its half-a-billion-dollar renewal – is an example of a growing suburb with infrastructure moving forward to accommodate young buyers.

“The value for money is great and it’s about 20 minutes from the northern suburbs.”

Mr Brudenell said knowledge was power and a good agent should take the time to listen to a buyer’s brief and steer them in the right direction.

“Inside knowledge on comparable sales and valuations is so important for the FHB,” he said.

Meanwhile, the REIT has found that this year Tasmanian homes are selling, on average, for 3.8 per cent higher than the listed price.

In 2020, on average, properties sold for 0.3 per cent higher than the listed price.

Listings are down 27.1 per cent, or about 1680 properties – compared with the same time last year.

The REIT also found that, across the state, properties are selling about two weeks quicker than they were last year with the average days on market figure dropping to 27 days this year from 41 last year.

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Originally published as Hobart’s rising real estate prices make it mission ‘impossible’ for young, single buyers