Hobart ended 2019 as the capital with the highest growth rate in the 12 months ending in November, ending what was a spectacular race to the top of the national real estate market.
"While the pace of growth has cooled in Hobart in the past two years, Hobart and regional Tasmania have stood out in housing values," said Tim Lawless, research manager at CoreLogic, in his outlook report for 2020.
"Despite the slowdown and several months of declining values ??throughout the year, Hobart's values ??rose 4.2% in the 12 months ending in November, while regional Tasmania saw its values ??increase by 4.9%. ”
The favorable housing conditions in Hobart are supported by high levels of migration and a thriving economy, which has triggered demand for housing.
Demand is supported by the low supply of housing, which tightens the short and long term rental markets.
However, Hobart's Cinderella race seems definitively over for a while.
The affordability of housing is weakening
The CoreLogic Housing Value Index indicates that in the November 2019 quarter, the housing value increased only 2.8%, which is lower than Sydney, Melbourne and Canberra. A contributing factor could be the decline in the affordability of the city. According to the Housing Affordability Report released by the Real Estate Institute of Australia in December 2019, the proportion of income required to repay home loans rose 0.4% to 26.2 % during the three-month period ending in September 2019.
"The affordability of housing has deteriorated considerably since the spike in housing values ??started in mid-2015 – as accessibility constraints become deeper, it is likely that the growth rate will moderate both in Hobart and in the regions of the State in 2020 ". Lawless says.
"However, with migration remaining high in the face of insufficient housing supply, it is highly likely that Tasmania's housing markets will continue to be among the best performing."
The decline in affordability has not yet pushed home buyers, whose number has increased 1.4% from the quarter of September 2019. These buyers represent 22.3% of the Apple Isle home owner market.
Despite the high rental demand, rental accessibility remains poor, the proportion of income required to pay median rents decreasing only from 0.3% to 29.6% during the same quarter.
SUBURB TO WATCH
PROSPECT VALUE: Units have the advantage
The Greater Launceston suburb of Prospect Vale has a good level of demand for units. The market saw prices climb 9.3% in the 12 months to November 2019 – and in the past five years, values ??have registered an overall increase of more than 30%. Nevertheless, the median price is still quite low, not even reaching the $ 300,000 mark.
Although the value of houses also increased, reaching almost $ 400,000, their growth was slower in comparison. Tenants, however, choose houses: the weekly rent for houses increased by 8.6%, compared with 3.8% for housing. The average rental return on home rentals was also higher, at 5.4%, while units had a return of 4.7%.
Unit of growth: prices increased by more than 30% during the five-year period ending in November 2019
Yield houses: generated rental yields higher than those of the units, at an average of 5.4%
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