Headlines are dominated by steep falls in property prices along the east coast, but the property boom is alive and well in a number of cities around the country, as is optimism about strong price rises well into the future.
- Hobart, Canberra and Adelaide are still seeing property price gains
- Local, as well as national factors, influence the market
- Analysts warn these cities are not immune to forces affecting the east coast
That is in sharp contrast to Melbourne and Sydney, where some home owners and investors are experiencing double-digit price declines.
Meanwhile, Hobart property prices have risen 10 per cent over the past 12 months.
And in the three years to July, dwelling values have shot up by over 32 per cent.
Trevlyn McCallum owns a home south of Hobart, as well as multiple investment properties around the city.
He is not calling time on the latest boom in property prices.
“It’s my firm conviction that we are going to see another half-decade at least worth of property prices in an upward trend generally,” he said.
Nor is Hobart real estate agent Matthew Chugg, who claims the Hobart property market is still red-hot.
“Actual stock levels themselves are down, our demand is up, so obviously that’s the perfect storm for a healthy property market.”
Trevlyn McCallum is confident the housing market will trend up for the next five years. (Supplied: Trevlyn McCallum)
Mr Chugg says prices are being driven higher by people in Sydney and Melbourne picking up their lives and heading south for a better life.
“The other big driver we’re seeing is what we call ex-pats moving back home.
“I guess some people left Tasmania when the economic climate was a lot different, probably back in the early 2000s and late 90s, or through the 90s, so we’re seeing a lot of those people who are now seeing that Tasmania is a good economic climate, it’s a great place to live, and moving back home.”
Fund manager Roger Montgomery, who studies the property market closely, agrees Tasmania has become the place to live.
“There’s a regentrification of Hobart going on at the moment, so a lot of hipsters moving down to Tasmania, starting gin distilleries or cafes, and it’s — believe it or not — become a groovy place to live.”
And Hobart is not the only capital city riding the property boom.
Over the past 12 months, prices in Canberra have risen close to 5 per cent, and 35 per cent since 2008, according to research firm CoreLogic.
And home owners in Adelaide have enjoyed price gains of well over 20 per cent this past decade.
|Market||1 years||10 years||20 years|
So, can state markets defy the national slump?
Economist Saul Eslake wants to use the latest data on house prices to highlight that there is no one housing market, and talk of a national slump in house prices is wrong.
“Yes, national factors such as interest rates and tax policy do have impacts on property prices all across the nation,” he said.
“But local factors, in particular migration flows from one state to another, a state’s capacity to attract international migrants, and of course the performance of different state economies, have an enormous impact on the demand for and supply of housing as well.”
But that does not mean property prices in Hobart, Adelaide and Canberra will not also eventually fall victim to the same forces pulling prices down in Sydney and Melbourne.
According to Roger Montgomery, it is only a matter of time before Hobart is hit too.
“The fact is that real estate is falling not just in Australia’s main capitals, but also in places like London, New York, Hong Kong, Toronto, Queenstown, Auckland, Vancouver — you name it.
“And that’s a function of the fact that interest rates are rising, and also foreign investor interest in property is waning,” he said.
Prices in Perth and Darwin have been sliding for years, retreating a further 3 per cent over the past 12 months.
Roger Montgomery claims we are now seeing those sorts of falls hurting Sydney and Melbourne investors, and Hobart and Canberra are next.
“It might be that Perth and Darwin led, Sydney and Melbourne are now turning, and it’s only a matter of time before you see Canberra and Hobart do the same things.”
Economist Saul Eslake agrees.
“We’ve spent a long time over the last two or three decades characterising Australia as having a two-speed economy,” he said.
“It shouldn’t come as a surprise to anyone that we have a multi-speed property market.”
But those with skin in the game are still confident that pockets of Australian housing will remain in strong demand for years to come.
Real estate agent Matthew Chugg is getting a bit sick and tired of all the dire forecasts.
“I think it was the front of a local newspaper just the passing weekend, there was a story about the markets declining and we’re all doomed and how things aren’t going to go well, but I think on the ground that’s very much not the case.
“You know, Hobart doesn’t need that scepticism.
“It’s not just Hobart or Tasmania that’s having a good time, it’s other parts of the country that we keep an eye on are tracking very well.”
And of course property flipper Trevlyn McCallum is only too keen to put a bit more elbow grease into his properties, confident the hard work will pay off.
“If we look at past performance, I think there is a definite property cycle and I think we’re definitely in the upward trend of that property cycle.”
Spare a thought for renters
The latest Hobart house price surge has seen renters suffer.
Saul Eslake points out that Hobart has now become one of the most expensive cities in Australia to rent an apartment.
“Although Hobart house prices are still well below those in most mainland capital cities, rents for houses in Hobart are now higher than almost any capital city except for Sydney and Darwin.”
Meanwhile, years of double-digit price rises are locking an unprecedented number of younger Sydney-siders out of the market.
According to lobby group the Committee for Sydney, 42 per cent of neighbourhoods across Greater Sydney now have a majority of renters.
Roger Montgomery says this will eventually have an effect on supply.
“But we will need some years of renter growth and rental growth in order to start seeing its positive influence on property prices.”