Hobart – a destination of choice

The bushfires on the mainland have been horrendous. Lives have been lost, wildlife has been decimated, homes have been destroyed. This summer season has been a wake-up call, and for many in the mainland states the idea of living in or near the bush has been dealt a significant blow.

Those who have been affected by the firestorms, and many who have thought of building a bush (or even coastal) retreat, are now asking whether they should build/rebuild, or maybe instead be looking further afield to a more favourable climate for pursuing that lifestyle.

We predict there will be an increase in interstate migration to Tasmania, brought about by the recent mainland experience.

Which then leads us to consider whether those wishing to come to Tasmania will be able to find somewhere to live when they get here.

Housing in Tasmania is in peak demand at the moment, with shortages in available accommodation and rising prices for houses to buy and to rent.

According to SQM Research, house prices in Hobart have increased by 12.7% over the last year, while rental prices have risen by 9.3%. This rate of growth has been consistent throughout the year, and in fact over the last 3 years, rentals have increased by over 28%.

The pressure on the housing market has also been brought about by a range of factors: an increase in the size of the population after many years of very slow growth, the increase in demand for tourism accommodation and also the changing nature of student accommodation, with the university increasing its intake of international students.

Airbnb advises there are now 667 residences registered for short-stay accommodation, and these have been at the expense of long-stay tenants. The debate continues as to what controls should be placed on those making available their properties to short-stay accommodation, and the issue is far from resolved.

The University is taking steps to rectify the problem of its making by actively creating new accommodation offerings, but in doing so has purchased hotel/motels which has reduced the available accommodation for tourists and travellers.

Meanwhile, there has been a boom in building new hotels, and the Hobart Council is promoting various land parcels for the building of apartments. The Council is promoting inner-city living as a lifestyle choice, but it is obvious it is not a first choice for many, and the outer suburbs are expanding rapidly with new housing being added to the housing stock.

In some respects this is a magic time for property owners. Property values continue to rise, demand for accommodation is strong and the ability to charge higher rentals is appealing. However there is a risk that we could kill the goose that is laying the golden egg.

It might be all well and good to say market forces are at work, but our concern is that too much of an imbalance in the market will lead to adverse outcomes. More renters will be forced towards a social housing solution, and the difficulty in finding suitable accommodation could turn people away for visiting and moving to the state. At the end of September 2019, there were 3444 applications for social housing on the government’s housing register, up from 3301 a year ago.

The Hobart City Council promotes the idea of an inner-city lifestyle and is encouraging the building of apartments to accommodate what it sees as a demand for such a lifestyle. In particular we can see opportunities for older members of the community to downsize from the family home to apartment living, where services may be more at hand.

While an admirable goal in itself, it is a lifestyle that does not suit all comers. Families will want a larger size block, while many are wanting to live a semi-rural lifestyle, or are being forced by circumstance to move to newly built homes in the outer suburbs. And for them there remains a shortage of supply.

The government has been caught napping over the last few years, and it now finds itself having to play catchup with quite an imbalance between demand and supply.

We welcome the government’s awakening to the problem, we acknowledge the government’s actions in endeavouring to resolve the present crisis, and we welcome the decision by the Federal Government to waive the long-standing housing debt that hung like a sword of Damocles over the state.

However, more needs to be done to re-establish a balance in the market, so that both tenant and owner can be happy. We also see opportunity in the development of apartment blocks for long-standing homeowners looking to down-size to now have an added incentive to do so.