Housing in Hobart: an overview of the data Richard Eccleston, Lisa Denny, Julia Verdouw & Kathleen Flanagan University of Tasmania May 2018
Informing the Housing Debate Tasmania is facing significant housing market challenges, including an acute shortage of suitable and affordable rental accommodation in Hobart. These challenges are driven by a range of factors including population growth, the tourismboom, a range of housing supply constraints, and their economic knock-on effects. We recognise that solutions to current housing needs require a more detailed and comprehensive understanding of the Tasmanian housing market. This presentation extends previous research undertaken by the Institute, Insight Three: A blueprint for improving housing outcomes in Tasmania and the Tasmanian Housing Summit Directions Paper, and is the first step in collating, analysing and publishing a range of key factors that influence the supply and demand of housing in our state.
Key findings from our analysis include: Executive Summary Constraints on the supply of new housing and a decline in housing completions relative to the 5 year average since 2016; Population growth in Hobart is accelerating and net migration losses are declining, and; Significant increases in whole property short-stay accommodation listings in the state, particularly in Hobart LGA. Taken together, this data highlights a significant and growing gap in the Greater Hobart housing supply since 2016. Consequences of this - typically borne by the most vulnerable in our city - include low rental vacancy rates, rising rents, and declining affordability that translate to increased housing stress and risk for low-income Tasmanians. Our aim is that this data, including future regular housing data updates, will provide a valuable and reliable evidence-based resource from which governments, policy-makers, planners and stakeholders can draw to inform their response to the current housing challenges in Tasmania.
Part 1: Supply and demand
Housing supply and demand Population growth Average people per dwelling 2011 2016 2016 2017 Dwelling demand Actual new dwellings Surplus Population growth Source: ABS, Census of Population and Housing, various years, ABS Regional Population Growth, Australia, 2016-17, Cat. No. 3218.0 New dwelling demand Brighton 917 2.6 353 600 247 267 103 145 Hobart North East 2,281 2.4 950 1,455 505 544 227 278 Hobart North West 1,201 2.3 522 807 285 449 195 90 Hobart South and West 1,466 2.6 564 796 232 433 167 66 Hobart Inner 1,281 2.3 557 578 21 447 194-173 Sorell Dodges Ferry 1,043 2.4 435 586 151 282 118 34 Hobart LGA 1,268 2.3 551 570 19 441 192-173 Greater Hobart 8,189 2.4 3,412 4,817 1,405 2,422 1,009 396 Surplus Between 2011 and 2016, the supply of new dwellings comfortably exceeded demand in Greater Hobart, with a surplus of 1,405 dwellings.
Housing supply and demand Source: ABS, Census of Population and Housing, various years, ABS Regional Population Growth, Australia, 2016-17, Cat. No. 3218.0 2011 2016 2016 2017 Population growth Average people per dwelling Dwelling demand Actual new dwellings Surplus Population growth New dwelling demand Surplus (relative to 2016) Brighton 917 2.6 353 600 247 267 103 145 Hobart North East 2,281 2.4 950 1,455 505 544 227 278 Hobart North West 1,201 2.3 522 807 285 449 195 90 Hobart South and West 1,466 2.6 564 796 232 433 167 66 Hobart Inner 1,281 2.3 557 578 21 447 194-173 Sorell Dodges Ferry 1,043 2.4 435 586 151 282 118 34 Hobart LGA 1,268 2.3 551 570 19 441 192-173 Greater Hobart 8,189 (1,637pa) 2.4 3,412 4,817 (963pa) 1,405 2,422 1,009 396 But for 2016-17 (assuming no new dwelling completions in that period) -greater Hobart population increased 1.1% since 2015/2016 (compared with 0.9% previous 12 months) -housing demand increased by 1,009 as a result -there was an estimated housing shortage of 173 dwellings in the Hobart LGA due to population growth. -the surplus housing supply in Greater Hobart (relative to 2016) fell to 396. Note: Does not include demand from temporary visitors or residents * statewide housing completions: ~ 1,800 for the year
Population growth In 2017, all Greater Hobart SA2s recorded an increased population growth rate compared with 2016. The Hobart LGA population growth rate increased from 0.68% in 2016 to 0.85% in 2017. The greatest rate of increase (0.4 percentage points) was Hobart South and West (0.9 % to 1.3% or 433 people). Population growth rate (%) 3.0 2.5 2.0 1.5 1.0 0.5 Hobart North East maintained a 1.0% population growth rate and recorded the greatest increase of 544 people. 0.0 2007 2008 2009 2010 2011 2012pr2013pr2014pr2015pr2016pr2017pr Brighton Hobart - North East Hobart - North West Hobart - South and West Hobart Inner Sorell - Dodges Ferry Hobart LGA Greater Hobart Source: ABS, Regional Population Growth, Australia, 2016-17, Cat. No. 3218.0
Internal migration Between 2010-11 and 2015-16: Hobart and Glenorchy consistently recorded net internal (non-international) migration losses. Other areas generally recorded net internal migration gains. In the 12 months to June 2017: Greater Hobart recorded a net internal migration gain of 1036 people. 7,243 people moved to Greater Hobart, including 2,783 people from other areas in Tasmania. 6,207 people left Greater Hobart, including 1,828 to other regions in Tasmania. Number of people 400 200 0-200 -400-600 -800-1000 2010/11 2011/12 2012/13 2013/14 2014/15 2015/16 Brighton Clarence Glenorchy Hobart Huon Valley Kingborough Sorell Source: ABS, Regional Population Growth, Australia, 2016-17, Cat. No. 3218.0
Migration 14,000 Migration movements influence housing. supply and demand through availability, turnover and volume. Historically, more Tasmanians have moved interstate than have arrived to live here from interstate. But departures have been declining, and in 2015, the number of interstate arrivals exceeded the number of interstate departures. Number of people 12,000 10,000 8,000 6,000 4,000 2,000 0 2012 2013 2014 2015 2016 Meanwhile, overseas migration has been stable since 2012, averaging 1,200 per annum. Net interstate migration (NIM) arrivals Net interstate migration (NIM) departures Net overseas migration (NOM) arrivals Net overseas migration (NOM) departures Source: ABS, Migration, 2016-17, Cat. No. 3412.0
Housing supply in Greater Hobart
Building activity Residential dwelling approvals (state-wide) have increased since March 2017 following two years of decline. An increase in public sector residential approvals (albeit from a low base) was recorded in the 12 months to March 2018 (104 dwellings compared with 24 the previous year) But Number of approvals (statewide) 3000 2500 2000 1500 1000 500 0 2013 2014 2015 2016 2017 2018 Private sector - houses public sector - houses Private sector - other public sector - other Source: ABS, Building Approvals, March 2018, Cat. No. 8731.0, monthly, original data
Building activity Between 2013 and 2015, approvals, commencements and completions increased simultaneously However, since 2015, the connection between approvals, commencements and completions has changed is this a commencement gap? From 2015, approvals and commencements declined substantially, and completions have declined further in 2016 reflecting the sharp decline in approvals and commencements from 2015. Number 2800 2600 2400 2200 2000 1800 1600 1400 While approvals have increased in 2016 commencements have remained relatively flat since late 2016 and the completion time for dwellings has increased. This gap will have a long term effect on completions and is Tasmania-specific. 1200 2013 2014 2015 2016 2017 Approvals Commencements Completions Source: ABS, Building Activity, March 2018, Cat. No. 8752.0, quarterly, trend data
Opportunity cost? There is a trade-off between residential and non-residential building activity: when one goes up, the other goes down. From 2017, residential approvals increased. However, it is necessary to analyse the value of the approvals when comparing residential and commercial building activity Change in approvals year-on-year (%) 40.0 30.0 20.0 10.0 0.0-10.0-20.0-30.0 2014 2015 2016 2017 2018 Residential Non-residential Source: ABS, Building Activity, March 2018, Cat. No. 8752.0, quarterly, original data
Non-residential building activity (the detail) While the number of non-residential approvals has declined, the proportion of non-residential approvals valued between $1 million and $20 million has increased: From 2017 to 2018, approvals valued between $1 and $5 million increased by 14 to 75 pa (12.3 percent of all approvals) Approvals valued between $5 million and $20 million increased from 9 in 2014 to 12, 13, 14, and 12 in subsequent years Proportion of non-residential approvals (%) 45.0 40.0 35.0 30.0 25.0 20.0 15.0 10.0 5.0 This may indicate that the size of the building and construction workforce is limited, affecting residential commencements and completions. 0.0 2013 2014 2015 2016 2017 2018 $250,000 to $1 million $1 million to $5 million $5 million to $20 million $20 million to $50 million $50 million + Source: ABS, Building Activity, March 2018, Cat. No. 8752.0, quarterly, original data
Workforce Workforce Apprenticeships Number of workers 20,000 16,000 12,000 8,000 4,000 Number of apprentices 2,000 1,600 1,200 800 400 0 2012 2013 2014 2015 2016 2017 2018 full-time part-time 0 2013 2014 2015 2016 2017 commencements completions in training (RHS) The building and construction workforce has been growing since February 2014, though growth is slowing. Source: ABS, Labour Force, Australia, Detailed, Quarterly, Feb 2018, Cat. No. 6291.0.55.003 Commencement and in-training numbers are rising, but apprentice completions are falling. This is indicative of time lag from training commencement to completion (approx. 4 years). Source: NCVER, Apprentices and trainees 2017 September quarter, March 2018
Housing supply in Greater Hobart Key points Housing supply/completions declined 24% in Tasmania 2016-2017 Suggests decline in completions of ~ 220 residential dwellings in greater Hobart last year relative to 5 year average Shortage of construction workers the most likely supply constraint
Part 2: Short-stay accommodation Tasmania is experiencing a tourism boom with obvious economic benefits, however there have been recent concerns over the impact of the short-term accommodation on the rental market by reducing the long-term residential rental supply in Tasmania and particularly in Hobart. The data in Part 2 is drawn from Inside Airbnb an independent, international data organisation which provides services to researchers, regulators and governments. Monthly Airbnb data listings are available from July 2016 to February 2018 in Tasmania (with a small break in the data between August and December 2016).
Airbnb From July 2016 to February 2018 total listings state-wide: 1,827 to 4,459. whole properties statewide: 1,198 to 3,400. Number of listings 5,000 4,500 4,000 3,500 3,000 2,500 2,000 1,500 1,000 500 0 Jul-16 Aug-16 Sep-16 Oct-16 Nov-16 Dec-16 Jan-17 Feb-17 Mar-17 Apr-17 May-17 Jun-17 Jul-17 Aug-17 Sep-17 Oct-17 Nov-17 Dec-17 Jan-18 Feb-18 Statewide (all) greater Hobart (all) Hobart LGA (whole properties) Hobart LGA (all) Statewide (whole properties) greater Hobart (whole properties) Source: Inside Airbnb, monthly data July 2016 to February 2018
Airbnb Greater Hobart Airbnb activity in Greater Hobart is concentrated in the Hobart LGA, which grew in whole property listings by 609 properties. This is consistent with the international experience. Greater Hobart total property listings include: Number of listings 1200 1000 800 600 400 200 Jul-16 Aug-16 Sep-16 Oct-16 Nov-16 Dec-16 Jan-17 Hobart LGA: all listings Feb-17 Mar-17 Apr-17 May-17 Jun-17 Jul-17 Aug-17 Sep-17 Oct-17 Nov-17 Dec-17 Hobart LGA: whole property listings Jan-18 Feb-18 56% Hobart LGA 15% Kingsborough LGA 15% Clarence LGA 8% Glenorchy LGA In February 2018, Hobart LGA accounts for 25% of state-wide total listings, and 25% of statewide whole property listings. Number of listings 2,100 1,800 1,500 1,200 900 600 300 Jul-16 Aug-16 Sep-16 Oct-16 Nov-16 Dec-16 Jan-17 Feb-17 Mar-17 Apr-17 May-17 Jun-17 Jul-17 Aug-17 Sep-17 Oct-17 Nov-17 Dec-17 Jan-18 Feb-18 Source: Inside Airbnb, monthly data July 2016 to February 2018 g. Hobart all listings g. Hobart whole property listings
Growth in Airbnb July 2016 February 2018 Growth Total listings (no.) Entire properties (no. and %) Total listings (no.) Entire properties (no. and %) Total listings (%) Entire properties (%) State-wide 1,827 1,198 66 4,459 3,400 76 144 184 Hobart LGA 416 250 60 1,114 859 77 167 244 Greater Hobart 787 485 62 1,993 1,515 76 153 212 From July 2016 to Feb 2018 the growth in total Airbnb listings increased in most cases well over 150%. The largest increases were entire home/apartment listings: 244% growth over the period in Hobart LGA (250 to 859 listings), 212% growth in greater Hobart (485 to 1515 listings), and 184% growth across the state (1198 to 3400 listings). Source: Inside Airbnb, monthly data July 2016 to February 2018
Airbnb whole properties 80% The proportion of all listings that are whole properties are also increasing, especially in Hobart LGA. From July 2016 to February 2018, there was a 17 percentage point increase in whole properties listed. Percentage of listings that are whole properties 75% 70% 65% 60% 55% Jul-16 Aug-16 Sep-16 Oct-16 Nov-16 Dec-16 Jan-17 Feb-17 Mar-17 Apr-17 May-17 Jun-17 Jul-17 Aug-17 Sep-17 Oct-17 Nov-17 Dec-17 Jan-18 Feb-18 Statewide whole property listings (as percent of all statewide property listings) Hobart LGA whole property listings (as percent of all Hobart LGA listings) Greater Hobart whole property listings (as percent of all greater Hobart listings) Source: Inside Airbnb, monthly data July 2016 to February 2018
Airbnb multi-listings Multi-listings is indicated by more than one listing per host. Increasing proportion of multilistings may be an indicator of increasing activity by commercial operators and professional managers. Data shows an increase in multilistings during the period to close to half of all listings: from 38% to 46% in state-wide total listings. from 39% to 45% in Hobart LGA total listings. Percentage of listings that are multi-listings 49% 47% 45% 43% 41% 39% 37% 35% Jul-16 Aug-16 Sep-16 Oct-16 Nov-16 Dec-16 Jan-17 Feb-17 Mar-17 Apr-17 May-17 Jun-17 Jul-17 Aug-17 Sep-17 Oct-17 Nov-17 Dec-17 Jan-18 Feb-18 Statewide Hobart LGA Source: Inside Airbnb, monthly data July 2016 to February 2018
Peak Airbnb? A sustained rise in price per night for entire properties (Hobart LGA) is indicated, from $152 to $212 in February 2018. This continued price growth suggests demand remains strong and that we haven t yet reached peak Airbnb. Price per night ($): Hobart LGA 220 200 180 160 140 120 Jul-16 Aug-16 Sep-16 Oct-16 Nov-16 Dec-16 Jan-17 Feb-17 Mar-17 Apr-17 May-17 Jun-17 Jul-17 Aug-17 Sep-17 Oct-17 Nov-17 Dec-17 Jan-18 Feb-18 Source: Inside Airbnb, monthly data July 2016 to February 2018
Data gaps What were current short-term rentals previously used for? What are actual current compliance levels with new short-stay accommodation provisions? Can we know more about Tasmania s private rental stock and changing supply?
Scale? Map 1: City of Hobart new visitor accommodation permits in accordance with planning provisions from July 2017 (approx. 60 permits). Map 2: Inside Airbnb whole property listings as at February 2018 (approx. 859 properties, of which 152 have been added since July 2017). Key point: Number of permits granted does not reflect the scale of shortstay accommodation activity in Hobart. Source: City of Hobart, to April 2018 Source: Inside Airbnb, monthly data July 2016 to February 2018
Assumptions and impacts If just 50% of the entire properties listed on Airbnb in greater Hobart were previously in long-term rental then the private rental stock will have declined by 750 homes (430 in inner Hobart) in an already tight rental market.
Part 3: Impact on the rental market
Supply constraints, population growth and tourism The bottom line Three factors have contributed to the tightening Greater Hobart housing market since 2016: 1. Population growth increased demand for dwellings by 325 per annum over 5 year average 2. Supply constraints decreased supply of 223 dwellings p.a. over 5 year average 3. Growth in short-stay accommodation reduced supply by a conservative 752 dwellings Net result: + 1,300 additional properties needed in greater Hobart to restore 2016 market conditions, and + 1,200 further properties per annum (assuming 1% population growth).
No vacancy 4.0% 3.0% 2.0% Number of vacancies Vacancy rate 0.7% Jul. 2013 Jan. 2014 Jul. 2014 Jan. 2015 Jul. 2015 Jan. 2016 Jul. 2016 Jan. 2017 Jul. 2017 Jan. 2018 Apr. 2018 At end April 2018: The vacancy rate in Hobart is 0.7, having risen slightly from 0.4 in the last quarter of 2017. For context, a vacancy rate of below 1.0% is considered a market failure and is likely to increase homelessness, slow short to medium term migration and negatively affect associated economic growth. Source: SQM to 12 May 2018
Rising rents Hobart house rentals were up 15.8% over the twelve months to March (compare this with average rise of 3.6% for five mainland state capitals). All dwellings rental prices up by 17.1% (and compare this with a growth of 3% average across all capital cities) House rents in Hobart are now higher than those of Melbourne, Brisbane or Adelaide (or Perth, not shown on this chart). Rolling three month median ($ per week) Houses 600 550 500 450 400 350 300 250 200 06 07 08 09 10 11 12 13 14 15 16 17 18 Sydney Melbourne Brisbane Hobart Adelaide Source: CoreLogic, to April 2018
Rising rents All dwellings Hobart is much more expensive than the rest of the state. Rents in Hobart (all dwellings) are now around $450 per week, whereas the same elsewhere is still under $300. Rolling three month median ($ per week) 500 450 400 350 300 250 200 06 07 08 09 10 11 12 13 14 15 16 17 18 Rest of Tasmania Hobart Source: CoreLogic, to April 2018
The rental affordability Index (RAI) The Rental Affordability Index (RAI) is an indicator of the price of rents nationwide relative to household incomes. In the RAI, households paying 30% of income on rent have a score of 100 (indicating a threshold for housing stress). An index of less than 100 suggests households would pay more than 30% of income on housing costs and would be at increased risk of housing stress. This map shows that in the December quarter (2017), all of the central, southern and eastern shore suburbs are unaffordable (scores of 80-100) and the northern suburbs are moderately unaffordable (scores of 100-120). Source: SGS Economics and Planning, 2018, https://www.sgsep.com.au/application/files/2215/2661/5595/r AI_May_2018_-_Press_Quality.pdf Note: Data on the RAI was published after the HCC Roundtable as was not a part of that presentation
The rental affordability Index (RAI) RAI comparison: Sydney and Hobart (2104-2017) A comparison of RAI in Australian cities shows that Greater Hobart is the least affordable capital city, with an RAI score of 102. This means that rents in metropolitan Hobart have become unaffordable even to median income families in the private rental market, and that many of these families are now experiencing housing stress. A comparison of RAI scores between Hobart and Sydney (which is the second least affordable city to rent in Australia) shows that while both cities have experienced similar levels of affordability since 2014, the RAI score gap has widened significantly in 2017. This is because income growth in Hobart has not kept pace with rising rent prices. Source: SGS Economics and Planning, 2018, https://www.sgsep.com.au/application/files/2215/2661/5 595/RAI_May_2018_-_Press_Quality.pdf Note: Data on the RAI was published after the HCC Roundtable as was not a part of that presentation
Economic impacts Cost of living shock, especially for tenants: - 25,000 households in the Hobart private rental market are paying ~ $5000 more for rent a year - This will result in increasing housing stress for many household Likely consequences include: Negative effect on discretionary spending Constraint on population and economic growth Increased cost and decreased supply of labour
No affordable homes As always the poorest members of our community are most vulnerable, reflected in increased homelessness and demand for social and community housing. Rental Affordability snapshot (Anglicare, 2018) highlights that of 1245 properties advertised in Tasmania for rent, the proportion of properties in the south that were affordable and appropriate: for young people, 0 for disability pensioner, 1 for single parents with one child, 0 for couple with two children on minimum wage, 15 for age pensioner couple, 13 Number of advertised properties 3,000 2,500 2,000 1,500 1,000 500 0 2013 2014 2015 2016 2017 2018 Tasmania Southern region The usually more affordable north west region showed a 45% drop in affordable properties from the year previous. Source: Anglicare Tasmania 2018
Thank you http://www.utas.edu.au/social-change Housing and Community Research Institute Institute for the Study of Social Change