Home Real Estate Hobart a winner in property downturn

Hobart a winner in property downturn

Hobart is steaming ahead with positive growth in property values and the rental market.

Azal Khan

Digital Journalist, Your Money

National dwelling values are set to fall for the next 12 months led by a deepening downturn in Sydney and Melbourne. But there is good news for Hobart, Brisbane and Perth.

That’s according to new research from SQM Research’s latest ‘boom and bust’ report.

SQM’s Louis Christopher predicts Sydney and Melbourne prices will fall between six and nine per cent in the next 12 months.

But elsewhere around the country is a more positive picture, especially Hobart.

Christopher predicts that Hobart prices will rise five per cent over 2019 thanks to a solid local economy.

The key drivers of the house price decline in Sydney and Melbourne is because of the overvaluing of property, Christopher says.

“Both cities had a boom between 2013 through to 2017 where dwelling prices went well above income serviceability.

“Both these markets were extremely overvalued. There were reasons behind it. They had very strong local economies and very strong population growth. But clearly the market got way ahead of itself.

“All it needed effectively was a trigger. And that trigger came along last year in the form of APRA crunching the mortgage market by lowering the ability to take up interest-only loans.

“That affected both the investor market which was already reeling from previous restrictions, and the owner occupier market.”

Christopher predicts the downturn in Sydney and Melbourne will last at least three years.

He said the royal commission and uncertainty around the federal election will impact the market, particularly investors who will be staying on the sidelines.

“Investors are very cautious now that its looking likely Labor will get up in the election. Labor have made it very clear that they wish to bring in negative gearing repeal and capital gains tax concessions repeal as well.”

But there are reasons to be optimistic about the property market, Christopher says.

“It’s a mixed market nationwide. Yes there are price falls in Sydney and Melbourne but they are not necessarily occurring elsewhere.

“One of the markets we are becoming quite bullish on is the Hobart housing market. This will be the third year in a row where it will be close to double digit growth in dwelling prices.

“The rental market in Hobart is also surging. Rents have actually risen on our numbers by 13 per cent just in the last 12 months.

“Happy days for existing investors,” Christopher said.