Hobart property prices soar

Hobart property prices soar

14 July 2017

Humble Hobart leapt from 77th to 34th spot in this year’s Knight Frank Global Residential Cities Index (GRCI), placing the city only 11 rungs behind Sydney and 10 behind Melbourne, reports Domain.

According to the GRCI, the average price of a home across 150 cities worldwide increased 6.9 per cent in the 12 months to March 2017. Hobart, however, turned out to be a star performer, boasting a price growth of 11.3 per cent.

“That is a surprise,” says AMP Capital chief economist Dr Shane Oliver. “[But] with high prices in Sydney and Melbourne, people have started looking around for better value elsewhere to live or buy an investment property and Hobart is well-priced.”

“Rental yields on, say, three-bedroom houses, are a lot higher—5.1 per cent compared to Sydney’s 2.8 per cent and Melbourne’s 2.6 per cent,” he said.

Knight Frank’s head of residential research in Australia, Michelle Ciesielski, agreed that Hobart prices had improved partly as a result of people from Sydney and Melbourne looking for more affordable alternatives in the property market.

In a separate report, Ms Ciesielski told The Australian that the pace of capital gains was likely to moderate this year and next.

“Next quarter’s rankings are unlikely to feature as many Australian cities in the top 50, given sales turnover growth tapered back in April and May,” she said.

“But we still expect reasonably strong growth for Sydney and Melbourne.”

President of the Real Estate Institute of Tasmania, Tony Collidge, told ABC News that the Hobart real estate market was experiencing a “perfect storm”.

“We’ve got a genuine shortage of residential property for sale, we’ve got a genuine shortage of residential property to rent,” he said.

“This is putting pressure on the market.”

Mr Collidge said positive economic improvements and liveability have played key roles in drawing potential property owners from across the country.

Last year 800 people from the mainland bought property in Hobart and relocated there.

“If you look at all the capital cities in Australia, Hobart is still the cheapest place to come, and that’s one of the attractions,” he said.

However, local realtor Nat Downton, named Australia’s best residential real estate agent in March this year, told ABC Radio Hobart that she believed that the Hobart market had peaked.

“I don’t have a crystal ball, but I think we’re right at the top of it,” she said.

The Knight Frank GRCI tracked the performance of house prices across 150 cities globally up to March 2017.

Seven of the top ten GRCI ranked cities are in China, with Toronto and Hamilton in Canada coming in at numbers four and seven. The best performing city in Australasia was Wellington, New Zealand, at number 11, where prices rose 20.6 per cent.

Australian cities are ranked as follows:

  • 23     Sydney        (+14.4 per cent)
  • 24     Melbourne (+13.4 per cent)
  • 34     Hobart         (+11.3 per cent)
  • 47     Canberra    (+8.9 per cent)
  • 83     Adelaide     (+5.0 per cent)
  • 102 Brisbane     (+3.5 per cent)
  • 142 Perth           (-3.5 per cent)
  • 149 Darwin        (-5.9 per cent).