The volatile Hobart market swung into negative territory during the recent quarter, with units bearing the brunt of the downturn
Calling the market’s performance a recovery may seem premature, with the latest data from
CoreLogic RP Data showing Hobart to be the worst-performing capital city for the month of May.
The median house price dropped a hefty 2.4% during the month and fell 0.4% during the May quarter. Performance of the unit sector was even worse, with the median unit price sliding 5.9% in May and losing 5.5% in value for the quarter ending May.
This is disheartening news for property owners currently hoping to sell their properties. However, it’s welcome news for buyers looking to snag quality properties at a lower price.
Buyer’s market
According to the Commonwealth Bank-CoreLogic Home Buyers Index, Hobart continues to show conditions that are favourable to buyers rather than sellers.
“Effective supply continues to outweigh effective demand, which results in a stronger negotiation position for buyers,” it says.
Andrew Wilson, chief economist at Domain, explains that the local economy is still unable to gain momentum to support price growth.
“Hobart has hit a bit of a hurdle itself, perhaps not as bad, but prices in Hobart are still below where they were four years ago,” he says. “The local economy is getting better, but it’s still a fairly slow market. I expect growth to be around the inflation rate of 2–3%.”
Bright spots
Despite overall weakness of the Hobart market, there are a number of areas defying the downturn, according to a recent report from the Real Estate Institute of Australia (REIA). In particular, the median price in the inner-ring suburbs of Hobart racked up the largest jump over the quarter ending March, growing by an impressive 18.2%. It also performed well compared to a year ago, with the median house price climbing 7.5%.
Launceston also recorded solid gains, with the median house price surging by 7.1% in the same quarter compared to a year ago, according to the report.
The median price for other dwellings, including units and apartments, also rose by 5.7% over the March quarter. The middle-ring suburbs in Hobart notched up 11.1% growth over the same quarter.
Rental market steady
Rents stabilised in the March quarter, settling at a median rent of $350 for three-bedroom houses in Hobart, according to REIA.
However, four-bedroom houses in inner Hobart are in high demand by renters, resulting in a strong increase in the median rent. During the March quarter, median rents surged by 14.4% to $555. Compared to the March quarter of 2014, four-bedders in the outer rings of suburbs recorded the highest increase, with median rents increasing by 12%.
The units and apartment sector saw a patchy performance, with one-bedders suffering a 2.4% drop in rents while larger units recorded an even bigger decline of 10%. Despite this, the rental market appears to be healthy, with the vacancy rate sitting at 2.9%.
SUBURB TO WATCH
Kingston: Family living at its best
It’s no accident that Kingston was named Australia’s number one suburb in last year’s Top 100 Suburbs For Family Living by CoreLogic RP Data for Aussie Home Loans.
It’s located 10km south of Hobart, and getting there is a pleasure via the Southern Outlet Road or the picturesque Channel Highway. The roughly 10,000-strong population benefits from three shopping centres – the Channel Court and Kingston Town Shopping Centres, and Kingston Plaza. Further, the suburb is home to the national headquarters of the Australian Antarctic Division. It is also known as the gateway to the immensely beautiful D’Entrecasteaux Channel.
All this comes at an affordable median house price of just $350,000, and current demand is shown by a vacancy rate of 0.72%.
Houses on Mountain View Drive enjoy a serene atmosphere and panoramic views of Mt Wellington. They are close to Kingston Primary School and major shops. Three-bedroom houses with balconies are a safe bet.
