Tasmania's "economic revival" drives growth

Investors looking to jump into the housing market should consider looking beyond the usual powerhouses and shift their gazes to Tasmania.

Over the year to August, the state’s capital, Hobart, reported a 3.1% growth, bringing its median value to $465,535, figures from CoreLogic show. Tasmania's growth bucked the overall decline in median value across Australia.

The sound building activity in Tasmania spells good news for the city. In fact, around 2,500 homes are expected to rise in the city this year, while renovation works are projected to remain healthy, said Housing Industry Association (HIA) economist Geordan Murray in July.

Also read: Hobart A Top Place For Property Growth

"This economic revival in Tasmania, fuelled by the state's housing sector, is creating jobs and wealth. It comes on the back of strong population growth, high levels of consumer and business confidence, wage growth and increasing house prices," he said.

On the other hand, national median dwelling values declined by 5.2% to $521,157 during the year to August. The most significant contributors to this downturn were Darwin and Perth, where prices slumped by 9.7% and 8.8% to $388,232 and $437,558, respectively.

Sydney and Melbourne also posted significant declines at 6.9% and 6.2%, bringing their respective median housing value to $790,072 and $626,703.

However, CoreLogic head of research Tim Lawless said the housing market appears to be on its way to recovery.

"While the 'recovery trend' is still early, it does appear that growth trends are gathering some pace, particularly in the largest capital cities," he said.  

Despite the growth in prices, Lawless said owners appear to be hesitant to let go of their homes, leading to the 17% decrease in sales.

Also read: The Best-Performing Suburbs In Australia

"As housing values continue to recover and the seasonal rise in listing numbers gathers pace, we are likely to see sales activity also trend higher," he said.

A separate report from CoreLogic revealed that the housing market's unaffordability has resulted in fewer homes changing hands, with many owners holding onto their properties for much longer.

On average, the length of homeownership has risen to 11.3 years for houses and 9.6 years for units over the past decade, representing respective increases of 3.8 and 2.9 years.

The table below shows how each capital city performed in terms of median housing values: