A resounding price of over $1.2m is anticipated for housing in the Hobart real estate market come 2027, says realestate.com.au. 

This is among the three possible scenarios outlined by PropTrack’s recent report given the property values’ continuous growth at the average rate recorded over a certain number of years.

The first scenario forecasts a growth of 3% annually on both house and unit prices. The second one assumes that prices will increase at the average rates seen over the past five years. And finally, the third scenario predicts a price increase based on the average rates observed during the past ten years.

If the median house prices surge with the second or third scenario, house prices could potentially reach $1.217m or $912,000 respectively. Units then would climb up to $859,000 (5 years) or $642,000 (10 years).

PropTrack economist Paul Ryan sees Hobart as a strong performing housing market going forward. He deemed the first scenario identified as the most likely among the three, anticipating more than double compared to the data in 2016.

In figures, Hobart’s recent median house price of $630,000 would be pushed up to $752,000 in 2027 if it grows 3% annually. On the other hand, 3% growth would take the median value of the units sector from $470,500 to $562,000.

Outside of greater Hobart in the southeast region, a typical $490,000 house would be about $100,000 more expensive by 2027 and a unit could increase $73,000 more than it is in the present.

Mr Ryan mentioned that the latter scenarios were not necessarily what he would expect to happen five years from now, nevertheless, he still would like to highlight how exceptional the past decade has been.

He reckoned that Hobart went from being one of the cheapest cities in Australia into one of the top performers. “While past performance doesn’t always indicate future performance, Hobart is a region I feel bullish about,” he confidently claimed. 

“The things that have brought it into the limelight include people’s preference shifts following Covid, the lifestyle Hobart offers, epicurean and outdoors activities, while also being relatively affordable — despite pricing growth — compared to Sydney and Melbourne where many people are relocating from.”

Since prices and interest rates are inversely proportional, Mr Ryan noted that one of the primary drivers during this time is the fall of interest rates, lower than what is expected. Hence, prices have driven up.

“Going forward, we are likely to see housing grow a bit faster than inflation, that was how I built the initial 3 per cent growth scenario,” Mr Ryan said.

“For Hobart and Tasmania, I’d be optimistic that housing prices will outperform inflation by more than the average.”

Similarly, Hobart property market analyst Tony Collidge agreed that price growth will be continuously observed in the coming years. However, he highlighted that he’s not expecting any double-digit numbers to dominate, unlike the previous year.

“I could see a return to the pace of a few years ago where we saw steady 4-5% annual increases,” he concluded.

In one of our articles, we mentioned how the 4 major banks of Australia forecast a single-digit rise in 2022 and a fall in property growth in 2023 (check it out here). The opposite is true according to the analysis of Propertyology. In fact, Simon Pressley, Founder and Managing Director of Propertyology (and a very good friend of the pod), foresees strong growth in an exciting era ahead. “Propertyology is forecasting over 20% growth in Hobart in 2022 and a good possibility of circa 40% over the next 2 years,” he claimed. 

It can be remembered that Mr Pressley was the only person in Australia to correctly predict that property markets would actually intensify during the onset of COVID-19 in March 2020 when all banks and various economists predict the contrary. 

“Propertyology is anticipating another surge in internal migration, especially by mainland lifestyle seekers and those eager to reap the benefits of the work-from-home way of life.”

Additionally, the organisation stands steadfast whether interest rates rise or not. “Borrowers are already miles ahead of mortgage payments and the huge demand for housing will remain underpinned by dirt cheap credit for many years to come.”

Another factor contributing to their analysis is the recently released data by the Reserve Bank of Australia (RBA) showing that financial capacity within household budgets which includes real estate equity, redraws, and offset accounts, has never been better. In addition, the volume of resale supply in the present is comparable to the data in 2010 but since then, Australia’s population has increased by 3.9 million; hence a possibility for continued double-digit growth.

As the real estate market continuously grows, the concern on affordability keeps growing, too, throughout every corner of the Hobart property market. 

Mr Ryan stressed how the huge home value growth in Hobart became a threat to those who wish to get into the market, particularly first-time buyers, since saving a larger deposit becomes a bigger burden. 

“Across regional areas, including Tassie, prices becoming out of reach of local buyers creates a conflict between those that have always lived in these regions and those that wish to move there.” 

In the last five years, according to PropTrack’s research, Claremont’s median house price rose highly by 88.3% followed by Glenorchy with an 85.5% increase. A range of 74-78% median value change was recorded in Kingston, Howrah, and Sandy Bay since 2016. 

In the 109th podcast episode of The Property Pod, the 4one4 Property Co. Team also talked about the predictions on the property market’s future to which they also unanimously agreed that it will continuously grow this year and in the years ahead. 

Since a lot of people are facing financial constraints and are affected by affordability concerns, Patrick Berry and John McGregor, co-hosts of the said show, who are also both real estate agents at 4one4 Property Co, left a message to those who are looking into getting into the market but are a bit doubtful.

Mr Berry reminded buyers to not give up. “I think so many people get disheartened, especially if they tried through 2021 to buy a house. They’re probably at that point where they don’t think it’s possible. I honestly think don’t give up, I think you’re going to see some opportunities arise over the next sort of six months. And it may still mean that you miss out on a few in the early months but I think, a few more opportunities will open up and you’ll finally get that place you’ve been searching for,” he said.

Mr McGregor, on the other hand, advised potential buyers to live in the moment. “Don’t try to pick the market. Don’t try and be too smart because people are now asking those questions like, ‘oh, is this the wrong time to buy? Is the price too high?’ Just buy to your lifestyle, buy and sell to your lifestyle,” he stressed.

As an inclusive real estate agency, 4one4 Property Co. would like to remind everyone who’s eyeing to purchase a property this year or in the next coming years that our Team is here to help and guide you from scratch until you fulfil the Great Australian Dream.