Affordability drops in Hobart as property prices continue to rise and the Apple Isle loses its crown
Hobart may have lost the top spot for some while as Sydney reclaims the title of best property market in Australia.
Over the three months to August 2019, Hobart recorded only 1.0% growth to Sydney’s 1.9%. Hobart also lagged behind Melbourne, which saw 1.8% growth in the same period, according to the CoreLogic Home Value Index for August 2019.
“Over the last few years, too many investors chased the Hobart ‘hotspot’ at a time when there was a lack of employment drivers, insufficient population growth and not enough infrastructure spending,” says Kate Forbes, national director of property strategy at Metropole Property Strategists.
Indeed, the Housing Affordability Report released by the Real Estate Institute of Australia (REIA) indicated that, over the June 2019 quarter, price affordability fell in the state, with the proportion of income required to make loan repayments rising to 25.8%.
“This represents an increase of 0.4 percentage points over the quarter and an increase of 0.4 percentage points from the June quarter 2018,” says REIA president Adrian Kelly.
“Rental affordability in Tasmania also declined over the quarter, with the proportion of income required to meet median rents increasing to 29.9%, an increase of 0.6 percentage points over the quarter and an increase of 2.3 percentage points compared with the June quarter 2018.”
In addition, the number of first home buyers slipped by 6.1% compared to 12 months previously. However, Kelly does not see this as a sign of negativity.
“This decline across the country is due to the rise in the average loan amounts after the lower levels of the March quarter – which appears to be an annual pattern,” he explains.
“The number of loans to owner-occupier first home buyers has recorded increases in five of the six months of 2019. This upward trend in first home buyer loans is expected to continue as over the past few years there has been an increase in the final quarter of the year.”
Moreover, the Apple Isle has retained much positive buyer sentiment, according to Income2Wealth director Paul Wilson.
“Markets such as Tasmania maintained a higher level of confidence on the back of affordability as well as a higher perceived value in terms of what you could get for your money.”
SUBURB TO WATCH
SUMMERHILL:
A stone’s throw from the Launceston CBD, Summerhill is mainly a residential suburb of Tasmania. It offers an excellent view that appeals to residents.
However, property values dropped in the 12 months to August 2019. House prices fell by 1.9% to a median of just over $300,000, while median unit values tracked downwards to below $250,000. Meanwhile, rental yields were high, with the weekly average for houses increasing to 5.4% in the year to June 2019. The average for units came in at 4.8%.
Summerhill is, at its name implies, located on a hill. There is a primary school here, and secondary schools are just a short distance away.
Education: Families have a number of schools to choose from in or near the suburb
Affordability: House and unit prices have fallen to a median of $300,490 and $241,652, respectively
