The apple of the Australian property market’s eye is starting to scale back as affordability declines and growth weakens
Hobart's meteoric rise over recent years has been driven by its affordability, but the capital’s advantage is being whittled down.
CoreLogic’s Home Value Index for April 2019 reported that property values dropped by 0.9% in Hobart – a not-too-surprising market shift for what has been the country’s top-performing city.
Hobart’s rents are also increasing at the fastest rate among the capital cities, at 5.7% in the 12 months to April 2019. This has been attributed to the lack of rental accommodation in the city relative to the level of demand.
Although Hobart still commands the highest annual growth of all the capital cities at 3.8%, the drop in prices may signal the beginnings of a slowdown.
“Tasmania’s been in growth for ages now, and it’s been the darling of the country since mid-2015. But it peaked during 2018 – growth has started to wind back,” says Results Mentoring director Brendan Kelly.
“This time next year, there will be neutral or low-digit growth.”
However, Hobart plateauing could create opportunities for other price points in the market and other cities. The most affordable pockets of the city continued to record strong growth of 8.2% over the 12 months to April 2019; moreover, parts of southeast, western and northern Tasmania are recording very strong growth conditions.
Pockets of regional growth
For Real Estate Institute of Australia president Adrian Kelly, there’s no cause for concern yet about where the Apple Isle stands.
“Other centres such as Launceston, Burnie and Devonport up on the northwest coast will probably see a bit more growth in terms of values, because those markets are still improving, whereas Hobart is a bit more stable now,” he explains.
“At the end of the day, Tasmanian property is still relatively affordable, particularly while interest rates remain low. So I don’t think we’ll see prices come back too much this year, if at all.”
With the popularity of short-term rentals like Airbnb, the issue of high rents as a result of supply shortage will persist, but Kelly points out that these rentals support the state’s blooming economy.
“Our government’s not too keen to meddle in the short-term accommodation market while tourism remains very strong. It’s a good problem to have – I’ve never seen Tasmania in such a happy place!”
SUBURB TO WATCH
LINDISFARNE: Steady and strong growth
Situated on Hobart’s eastern shore, Lindisfarne is a representation of the city’s continued domination of the Australian property market, with dwelling values soaring into the double digits.
House prices rose by 11%, but the median remains under $550,000; meanwhile, unit values shot up by 14.5% to a median of $371,650. Indeed, these values have been on a significant upward trajectory since April 2014. In the rental market, the weekly rent for houses got a 7.1% boost to $450.
At Lindisfarne Bay, rowing, sailing and motor-cruising clubs reign. A large recreation park houses playing fields for cricket, tennis and bowls. There is also an ANZAC memorial park that has a large Tasmanian Aboriginal midden.
Amenities: The suburb has several sports facilities and watersports activities for residents and visitors
Growth: Lindisfarne sustained long-term growth over the five years to April 2019
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