Is there light at the end of the tunnel for Hobart’s embattled rental property market? If there is, it is getting fairly dim. Supply is falling far short of the demand and Baxton Property Management in Hobart, like most operators in the rental field, warns of chaos unless the rental stock increases significantly. And so far it’s not happening – in fact the rental pool is shrinking.
The rental market in Hobart has run full tilt into a supply crisis while riding the wave of an influx of new residents into the small Tasmanian capital over the past couple of years. The wave of newcomers pushed up the population by around 16%, but the number of rental properties available hasn’t risen enough to meet their needs.
Few Developments on the Horizon
Are new developments likely to save the day? There is some action providing a faint glow in the development sector’s tunnel light. But its initial gleam has been dimmed by some new residential developments which might have changed the situation, having to alter their plans following clashes with the Hobart city council. Examples are the proposed $80 million Montpelier Project in Salamanca, which now provides temporary homes for cars as a parking lot, and others, like the Elliot’s Apartments development in Battery Point, which have been reduced in size.
Before the Population Tsunami Hit Hobart
Before Greater Hobart and its surrounding satellites entered the limelight as one of the hottest spots in Australia for property investment and lifestyle changes, more than 30 percent of its residential properties were available as rentals. In 2011 this amounted to just under 7,000 properties, and most of them were occupied, according to that year’s census.
This put available rental accommodation at 6 percent higher than the overall Australian statistic for rental stock back then. But red flags started showing when the 2016 census revealed that the rental pool had only increased by 201 properties, but the population had already risen by over 20,000 people. If a third of those newcomers needed rental accommodation (the existing split between renting and owning in Hobart), it would have provided accommodation problems right then. And the influx didn’t stop then.
Rental market Hit by Flood
By March of 2016, statistics showed a population growth for Tasmania of 0.5 percent over the previous year, with Greater Hobart growing by 0.8% and accounting for 222,802 of the states just over half a million residents. Latest statistics available add at least another 10,000 to the population so the rental vacancy level stood at a record low of 0.3% by December, 2017.
Meanwhile the property market in Hobart boomed, attracting international, mainland and local investors and pushing the prices of properties (and rents) in Hobart. While many of the properties bought by investors continued to be available as rentals, and some new rental opportunities were created, not all of them ended up as rental stock because of another huge wave – a large increase in the number of tourists who have chosen the island state as a destination.
This has given rise to a large number of properties being withdrawn from the rental market and turned into temporary accommodation for tourists. Airbnb tops the list of options, and a UK concept of couchsurfing is also becoming a more attractive option to those who once rented out on longer leases. Recent council applications have been littered with applications for change of use to visitor accommodation. Indications are that these options have reduced the rental stock in the capital by up to 1,000 houses.
Baxton Property Management in Hobart seeks to keep its property owner clients and their tenants informed regarding information that can impact on them. For more information regarding the rental property market and property management in general, visit the Baxton blog online.
Written and syndicated by
– Baxton Media.
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