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Hobart Sept 2008
1. propell market
SEPTEMBER | 2008
Fundamentals Strong But
Market Responding Slowly
Hobart’s September quarter 2008 has produced the second highest
increase in house prices for the country. A whole 2.03%. Similarly, in new
home activity there were 818 building approvals which is 4.60% up on the
previous quarter. On the downside, housing finance commitments were
down 14.33% which was the largest fall across all states and territories.
The suggestion is that while building activity may be strong, no one’s buying anything.
These figures compare to a decrease nationally of 5.78% and 9.19% respectively.
Population growth for Hobart was 0.93% annually and there is a low rental vacancy rate of
• 818 building approvals
1.3%, up from 0.9% the previous quarter. Rent increases have been fairly moderate and
for the quarter. 4.60%
when combined with average to low capital growth, Hobart and Tasmania in general are
up on June 2008
considered to be the most affordable areas of the country. Recent house price growth has
not affected affordability and the latest figures show prices increasing only marginally.
• 14.33% decrease in
housing finance
Hobart has experienced strong labour conditions into 2008 which is reflected in the
commitments. The
unemployment rate dropping to 3.8% from 4.2% registered in June. This rate is under the
largest decrease in the
national average of 4.3% and combined with increasing population growth signifies
country
underlying confidence in the Tasmanian economy. A sometimes volatile Tasmanian
labour market, fluctuating industry outputs and a change of Government may hinder
• 2.03% increase in progress however.
house prices for quarter
(second highest in the
Hobart house prices have increased
country), 9.94% growth
by 2.03% for the quarter with the
year-to-date
median house price for September
2008 sitting at $292,536. This
• Hobart’s affordability is
represents an increase of 9.94% since
attractive but buyers
September 2007. Hobart is one of the
are not present in the
more affordable cities in Australia
market and first home buyers still have
considerable options to enter the market. At present, the decrease in interest rates
nationally has not produced a noticeable stimulus. Whether this is a result of global
financial problems or local uncertainty is hard to say at this stage.
1300 VALUER Property Intelligence for today and tomorrow
2. Propell National Valuers | Residential Overview | SEPT 2008
House and unit price growth in the top 10 suburbs for the year-to-date varied from 24.5%
in Hobart City through to 10.4% in West Hobart for houses, and 18.4% in Mount Stuart to
7.4% in Lutana for units, with evidence showing that properties near the CBD and along
the banks of the Derwent River performed the best. Unit growth was subdued throughout
the year-to-date despite the low entry prices indicating that detached housing is a
preferred option in Tasmania for owners and investors alike. Well placed waterfront units
however showed good returns.
• Hobart City top
The table below illustrates the top 10 Hobart growth suburbs based on median house and
unit prices for the September quarter 2008 year-to-date. performing suburb with
Top 10 Growth Suburbs growth of 24.5% for
houses and Mount
Stuart with 18.4% for
Suburb Median Q3 Median% Suburb Median Q3 Median%
(Houses) 2008 Change (Units) 2008 Change
units
Hobart City $465,000 24.5 Mount Stuart $208,000 18.4
Sandy Bay $531,000 20.7 North Hobart $285,000 16.7
• Well located waterfront
Fern Tree $356,000 19.3 South Hobart $281,000 16.3
properties showed
South Hobart $374,000 19.3 West Hobart $288,000 14.0
most growth followed
Mount Stuart $410,000 19.0 New Town $215,000 10.7
by CBD proximity
Moonah $243,000 14.7 Sandy Bay $363,000 10.2
Goodwood $230,000 13.2 Hobart City $445,000 10.2
South Hobart $605,000 11.9 Dynnyne $285,000 7.8
Lutana $240,000 11.4 Goodwood $190,000 7.4
West Hobart $435,000 10.4 Lutana $190,000 7.3
Source: RPData
Hobart’s house price has increased by 9.94% for the year to September, while unit price
growth has been -7.23%. This compares to South Australia(10.84% and 11.46%),
Melbourne(5.80% and 4.16%), Brisbane(3.66% and 1.73%), Darwin(12.89 and 10.34%),
Perth(-4.31% and 1.26%), Canberra(2.73% and 7.64%), and Sydney(-1.48% and -1.18%)
Source: RPData
2| QUARTERLY RESIDENTIAL REPORT—Hobart
3. Propell National Valuers | Residential Overview | SEPT 2008
Residential Rental Market
In the September quarter vacancy rates increased to 1.3%, from 0.9% in the previous
quarter. The average weekly rent for a two bedroom unit in Hobart is $240 per week. This
is an increase of 0.00% over the quarter and 4.34% for the year. The average weekly rent
for a three bedroom house in Hobart is $290 per week, an increase of 1.75% and 5.45%
year-to-date.
Current tenant demand for rental properties in Hobart is strong and rental rates are
considered the most affordable in the country. Tasmania continues to project an enigma
as it has a strong rental market and consistent price growth but is affected greatly by its
small market and population fluctuations.
The graph below illustrates the average residential rent growth in three bedroom houses
and two bedroom units in the Hobart area over the last two years.
• Vacancy rate increased
to 1.3% for quarter
• Hobart the most afford-
Source: REIT
able rental location in
Australia
• Yields on houses at The table below highlights median rents within the Statistical Division of Hobart for the
5.1%, units 4.8% September quarter 2008. These figures represent the average of all house and units
within the Division. The gross rental yield figure is also shown.
Hobart Statistical Sept-08 Sept-07 Qtr Yearly Gross
Division % Change % Rental
Change Yield %
Houses $290 $275 1.75% 5.45% 5.1%
Units $240 $230 0.00% 4.34% 4.8%
Source: REIT
Suburb Sales Q1
2007 Median Q1
2007 Sales Q1
2008 Median Q1
2008 Median % Change
3| QUARTERLY RESIDENTIAL REPORT—Hobart
4. Propell National Valuers | Residential Overview | SEPT 2008
Population
As at December 2007, The Hobart Statistical Division had a population growth of 0.93%,
the lowest in the country below the Statistical Divisions of Adelaide (1.06%), and Sydney
(1.21%). This represented a total of 1,918 people or the equivalent of 36 people per week.
Tasmania as a whole grew by 0.70% or 3,419 people. The largest growth continued to
occur in the Statistical Subdivisions of Greater Hobart(0.93%), and Southern(0.80%) with
Mersey-Lyell(0.41%) having the lowest.
Net Natural Increase to December 2007 increased to 582(2.28%) from 569 compared to
September 2007. Net Overseas Migration also increased to 403(13.84%) from 354, while
there was an easing in Net Interstate Migration of 236(8.17%) from 257. Preliminary
figures suggest more people entering the state than leaving. This is a good sign for
Tasmania and it can be partly attributable to the level of affordability in the state along
with the potential for new industries and the expansion of existing industries as
international players, particularly mining set up shop in the state.
• Hobart Statis tical
Tasmania’s Gross State Product for the year to December 2007 was 2.1% (below the
average of 2.7%), with a State Final Demand growth of –0.7%. This contributed to Total Division has population
Domestic Demand by 0.0%.
increase of 0.93%
As at September 2008, there were 226,600 people employed from a total labour force of
• Net interstate migration
241,700. This was an increase of 0.9%. Of the people employed, 154,600 were full-time
employees while 67,400 were part-time employees. The unemployment rate was 3.8% eases slightly
down from 4.2%. This is the lowest level of unemployment in Tasmania since recorded
data in 1978. The participation rate slowed however from 60.9% to 60.3%.
• Unemployment rate of
3.8% the lowest in
Tasmania’s primary growth industries are Manufacturing, Finance and Insurance,
recorded history for
Agriculture, Forestry and Fishing. The construction industry is also a major force in
Tasmania and has recorded a steady increase in the number of people employed over the
Tasmania
last 5 years. In 2006-2007 there were 16,500 people working in the construction industry
in Tasmania. This represented an increase of 3.8% on 2005-2006 and 36.4% on 2002-2003.
In 2006-2007 the construction industry employed 7.4% of the state’s total employed
personnel.
4| QUARTERLY RESIDENTIAL REPORT—Hobart
5. Propell National Valuers | Residential Overview | SEPT 2008
Major Projects
The 2008-2009 Tasmanian budget has been balanced between investment in Capital
Works infrastructure and social and economic concerns including:
Infrastructure
$626.8 million for roads, bus-ways and other transport systems
$492.8 million for hospital and other health facilities
$80 million for drought proofing Tasmania
$135 million for new and existing schools
Families
$34.8 million to improve literacy and numeracy skills
$99 million to support public housing
$80 million for reforms in Family Services
Environment
$5.7 million for climate change programs
$12 million for urban renewal and built heritage
$12 million for saving the Tasmanian Devil
• Over $626 million Business
outlined for roads, bus- $65 million for additional tax cuts
ways and other $10 million for workforce participation programs
transport infrastructure $7.2 million for improving job skills and new training programs
• The 2008-09 Budget is a FOR MORE INFORMATION
Summary CONTACT
balanced social and
economic budget
Aaron Parker
Research Manager
Another mixed quarter for Hobart with house prices
increasing slightly along with building approvals,
while unit prices decreased along with housing
Phone: 07 5443 2322
finance. Again, unemployment improved indicating
Fax: 07 5443 8039
the underlying strength and growth in the economy,
E-mail: aparker@propellvaluers.com
while rental rates tapered off. As usual, Hobart and
Tasmania in general provides conflicting data for first
home buyers and investors yet it still remains the
most affordable state in the country. New stock
coming on to the market from building activity will
impact house prices negatively in the current climate
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unless more incentive is given to first home buyers.
Interest rate reductions have not created the stimulus
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needed up to this point, nor has new industry created
(1300 825 837)
migration incentive.
Propell National Values does not give any warranty in relation to the accuracy of the information contained in this report. If you intend to rely upon the information
contained herein, you must take note that the information, figures and projections have been provided by various sources and have not been verified by us. Whilst all
care has been taken in the preparation of this report, we have no belief one-way or the other in relation to the accuracy of such information, figures and projections
contained herein. Propell National Valuers will not be liable for any loss or damage resulting from any statement, figure, projection or any other information that you rely
upon that is contained in the material. COPYRIGHT - Propell National Valuers 2008
5| QUARTERLY RESIDENTIAL REPORT—Hobart