In the three months to January 2020, Hobart settled for a solid third place behind Sydney and Melbourne in terms of property price growth, with an increase of 0.9% as per CoreLogic’s Home Value Index.
“Hobart’s property price boom, when house and unit prices rose by over 50% between 2015 and 2019, is expected to come to an end in 2020,” says Domain economist Trent Wiltshire.
“Our forecast model regards Hobart property prices as somewhat overvalued, meaning a gentle price correction should follow. Home loan commitments are still rising, but not by as muchas in other states. Tasmanian population growth is also forecast to slow in the next couple of years.”
This means some relief may be on the horizon for Hobart’s very tight rental market, which continues to be the tightest of all capital city markets, according to CoreLogic’s Home Value Index. Rental rates went up by 5.8% over the year to January 2020 as rental supply dropped further.
“Supply has been unable to keep pace with demand due to a number of reasons, including land availability. Economic factors also play a part, and the impact each factor has will differ depending on the strength of the factors in each location,” says Real Estate Institute of Australia president Adrian Kelly.
In addition to low supply, the rental market’s high activity was likely spurred by slowing investor activity in the housing market.
Launceston is Apple Isle’s rising star
The regional pockets of the Apple Isle performed more favourably, showing the strongest conditions of all regional markets in the country, according to CoreLogic. Some areas reported annual growth rates of over 6%, while remaining very reasonably priced.
“Launceston was officially one of Australia’s best-performing property markets over the last three years, and one has a strong sense that this beautiful city is about to boom,” says Propertyology managing director Simon Pressley.
“Buyers in Launceston have increasingly gained confidence from a local economy that’s driven by a variety of world-class agriculture products, great wineries, strong tourism, and a soon-to-be-built new university.”
With a strong local economy being crucial to housing market growth, it could inform the prospects of Tasmania’s regional hub in the years to come.
SUBURB TO WATCH
MONTROSE: No signs of slowdown
The suburb of Montrose is still going strong, even as Hobart’s growth eases up. House prices rose by more than 10% over the 12 months to February 2020, continuing the trend of double-digit growth recorded over the last fi ve years.
Despite the increase in values, Montrose houses remain affordable, with the median price still under $450,000. Moreover, landlords are earning average rental returns of 5% from increased rental rates of $445 for houses and $310 for units.
Montrose’s appeal can be attributed at least in part to its great location. It is close to MONA (the Museum of Old and New Art) and Glenorchy’s high street, home of the Northgate Shopping Centre.
Amenities: Montrose is just a short distance away from MONA and the Northgate Shopping Centre
Affordability: Median property pricesin Montrose don’teven hit the $450k mark
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