Whilst Australian home prices fell again in May, it’s still looking good over in the apple isle. But is all as it seems?
For the eighth month in a row, Aussie home prices fell, dragged down once more by the sluggish markets of Sydney and Melbourne. Across the board, house prices fell by 0.1 per cent, followed by a fall of 0.3 for apartments.
Meanwhile Hobart forged head recording another price increase of 0.8 per cent. Along with Hobart other cities have also now emerged as hotspots. Adelaide recorded a growth of 0.5 per cent, whilst Brisbane had 0.2 per cent growth.
But as they say, be careful what you wish for. Strong interest in Hobart has now created a potential problem – that of accommodation shortage.
House prices in Hobart over the past year have been strong at 12.7% increase, leaving other capital cities far in their wake. The growing demand has now resulted in a decline in the volume of available stock available for sale at just 30.7 per cent.
As a result, rent have started to rise with an increase of 12.2 per cent over the past year, making it more difficult for first home buyers to save for a deposit to enter the market.
CoreLogic’s Cameron Kusher says whilst the cost of housing in Hobart is nowhere near as substantial as in Sydney and Melbourne, with far less jobs and a much smaller economy the increasing values do make market entry more difficult for first-time buyers.
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A Real Estate Institute of Tasmania (REIT) report shows that first quarter sales values rose to $1.034 billion while median home prices jumped by 7.2 per cent to $492,000.
Tasmania in general is now considered to be a desirable place to live, study in and visit. However, it is also facing a growing population, an influx of university students, a booming tourism market, and increased social housing demand which means housing needs are getting more pressing.
Elsewhere Melbourne suffered the biggest monthly drop dipping -0.5 per cent followed by Sydney (-0.2 per cent), Darwin (-0.2 per cent), Canberra (-0.2 per cent) and Perth (-0.1 per cent).
The issue of housing affordability continues to have Sydney and Melbourne hamstrung. CoreLogic’s Tim Lawless says the median dwelling price to income ratio is 9.3 and 8.0 respectively, which is still significantly higher than other capital cities.
Mr Lawless says with the dwelling values so high compared to incomes, and wages stagnating, saving for a deposit and funding higher transactional costs will still be challenging for many in these markets.
Above photo credit: Last Minute Day Tours Pty Ltd
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