Tasmania’s house prices are still on the rise, but is the property market heading for a slowdown?
There is simply not enough Hobart property for the voracious market appetite. (Supplied: realestate.com.au)
Hobart’s housing market continues to buck the national trend, once again being named Australia’s best-performing capital city for house price growth.
While national prices experienced their steepest drop since the global financial crisis, the nation’s southernmost capital city continued full steam ahead.
So what makes Hobart’s housing market so different to the rest of the country, and will the boom come to an end anytime soon?
What’s driving prices up?
The latest report from property analyst CoreLogic report, released yesterday, showed that in the year to December 2018, dwelling prices jumped 8.7 per cent in the state’s capital and 9.9 per cent in regional Tasmania.
That compares to a national drop of 4.8 per cent, with falls of 8.9 per cent in Sydney and 7 per cent in Melbourne.
Homes in Hobart are selling fast, with some changing hands within days of becoming available. (ABC News: Angela Ross)
Hobart also jumped ahead of Adelaide and Perth to record a median house price of $490,000 dollars.
CoreLogic’s head of research, Tim Lawless, said population growth and a lack of housing supply had put pressure on the state’s property market, leaving little room for potential buyers to negotiate.
“Homes are selling very quickly, there’s a lot of urgency in the marketplace,” he said.
Real Estate Institute of Tasmania (REIT) president Tony Collidge said Hobart needed at least 3,000 properties to meet current rental and buyer demand — but the market was not likely to catch up for at least another six years.
“If we could drop those 3,000 today, the market would be fairly buoyant, we’d be able to meet our rental needs and the crisis would disappear,” he said.
Some areas of Hobart have seen an increase to median house prices of 75 per cent. (Supplied: Hobart City Council)
Who’s buying in Tasmania?
According to the REIT, one quarter of buyers are coming via the mainland, with 75 per cent of homes owner-occupied.
“The vast majority of people I think [are moving for] lifestyle,” Mr Collidge said.
“They were able to sell in Melbourne, Sydney, Brisbane or Perth and buy down here so that they can sell for a higher price and buy here for much cheaper.”
Aside from Tasmania’s widely-held reputation for relaxed lifestyle and “clean, green image”, LJ Hooker’s Mark Devine said tougher lending criteria set out by the major banks was driving people out of cities like Melbourne and Sydney.
“The actual rate and the level of return you generate out of a residential investment property in Hobart is good compared to other areas of the country,” Mr Devine said.
The property market was driven lower by sharp annual declines in Sydney, Melbourne, Perth and Darwin. (CoreLogic)
As for the boom areas, according to the REIT it is the inner-city suburb of West Hobart that has recorded the highest increase in median house prices.
Between 2014 and 2018, the median price in West Hobart went up by 75.1 per cent, followed by South Hobart (up 71.7 per cent) and Sandy Bay (up 66 per cent).
LJ Hooker’s managing director, Mark Devine, said inner-city areas offered an appealing change of scenery for interstate investors.
“They have good access to the city and they offer a very attractive residential destination with some lovely old homes, so [they’re] very favourable [destinations] for people,” he said.
Is the local market heading for a crash?
Short answer, no.
But Real Estate Institute of Tasmania president Tony Collidge predicts the market will slow in 2019, and demand will pick up across regional Tasmania as Hobart becomes less affordable.
“When you look at the north-west coast and what you can buy properties for anywhere up along that strip up there, it’s incredible value,” Mr Collidge said.
Mr Devine says economic factors are bringing people to the regions, because areas like the north-west are more affordable.
He says while the market will slow, it will still perform well because of ongoing construction and a booming economy.
“There seems to be a good underlying amount of activity that would suggest that the market will continue to perform very strongly,” Mr Devine said.
Despite the boom, Hobart’s market is seen by outsiders as affordable by comparison. (ABC News)