Most mainlanders are more likely to associate Hobart with Mona than its real estate market, but the latest data shows we’re no longer just holidaying in Tasmania, we’re buying there.

In the past 12 months Hobart house prices grew faster than every other capital city in Australia – up 15.2 per cent, data from Domain State of the Market report shows.

For the first time the median house price surpassed the $400,000 barrier, with the growth rate at its highest in more than a decade.

While this may come as a surprise to some, savvy investors have been betting on a Hobart revival for much longer.

Sydney-based accountant Glen Hunt has a portfolio of eight properties across Australia – including his home in Penrith, and investments in suburbs such as Dubbo, Cairns, Wollongong and Lutwyche.

“Investors are seeing a lot of positive things happening in Hobart at the moment. . . we are finally on the shopping list.”Todd Stevenson, Roberts Real Estate Hobart

But one of his most recent portfolio purchases was a newly built townhouse in Hobart’s Moonah for $310,000 in September 2014. He wasn’t the only investor buying – the other two townhouses in the block were also bought by investors at the time.

“When it was initially pitched to me I thought ‘really, Tassie?’ but it turns out there was a lot of upside and I took a leap of faith,” Mr Hunt said.

Renting at $360 a week, the property “pays for itself” and has had only two days of vacancies.

“It’s one of the best-performing properties I own,” he said.

His buyer’s agent, Simon Pressley managing director of buyer’s agency Propertyology, wouldn’t have considered buying in Hobart 10 years ago as it was an economic “basket case”.

But in the past two years he has bought more than 80 properties on behalf of investors across Australia.

“The market is hotter there now than data is reporting,” Mr Pressley said.

“We feel confident it will be Australia’s best-performed market for capital growth and yield over the next few years.”

He pointed to strong growth in local industries, such as tourism, education and food processing, along with a change in government as the “pick up” the state’s economy needed.

“We’ve seen about 18 months’ growth – which is usually what is needed for the majority of investors to feel confident to put a toe in the water. There’s still lots of room for growth,” he said.

It’s no surprise why Hobart has proven popular with east coast investors priced out of the Sydney and Melbourne markets. In addition to surging prices, it also boasts the cheapest homes, lowest vacancy rates and highest rental yields of any capital.

Hobart apartment prices increased 7.7 per cent over the 12 months to June, to $310,854.

Economist and vice-chancellor’s fellow at the University of Tasmania, Saul Eslake, noted the growth was “off a very low base” as Hobart had underperformed in terms of property prices and its economy compared to most other cities in the past five years.

“Mona has made a contribution – it has changed the image that Hobart presents to the rest of Australia and has been a drawcard for tourists,” Mr Eslake said.

It had also helped accelerate a surge of restaurants, cafes and hotel development in the city, he said.

But he wasn’t convinced prices growth would necessarily be in double figures again in the next 12 months, warning “history would counsel caution” with surges in prices in the past not being maintained for the long term.

Todd Stevenson from Roberts Real Estate Hobart said there was strong buying activity from upgraders, as well as interstate and local investors, pushing up prices in the inner suburbs.

“I believe investors are seeing a lot of positive things happening in Hobart at the moment from business and development to strong tourism numbers,” he said.

“We are finally on the shopping list.”

Domain Group chief economist Andrew Wilson pointed to Hobart’s “tremendous affordability” compared to Sydney.

“A change in government, revival in infrastructure and migration picking up has reactivated confidence and an improvement in the local economy,” he said.

Hotspotting founder Terry Ryder had also seen signs of growth in Hobart, with the state economy having “improved enormously”.

He estimated a third of the investors in Hobart were from Sydney, and believes this could increase as the east coast capitals approach the top of their market.

In July, Hobart was ranked 34th for house price growth on Knight Frank’s Global Residential Cities Index, which ranks 150 cities worldwide. It was in 77th position in the report for the same quarter in 2016.

Knight Frank head of residential research Michelle Ciesielski said there was an uptick in the first quarter of 2017, with three cities from Australia in the top 50 on the list, compared with none six months ago.

“Hobart prices strengthened for the second quarter, stimulated by those priced out of these heated east coast cities,” Ms Ciesielski said.

Commonwealth Bank’s latest State of the States report placed Tasmania fourth, compared to equal last place in 2016, though there was little separating it from the bottom three states – Queensland, Northern Territory and South Australia.