House prices fall again

HOUSE prices in Hobart fell again in July as higher interest rates begin to bite.

But buying a property in Tasmania’s capital will still cost you 10 per cent more than it did last year and almost double what it did in early 2020.

The PropTrack Home Price Index and CoreLogic’s latest monthly report, both released on Monday, show Hobart home prices fell -0.5 per cent in July.

However, the city remains one of the top performing capital markets for price growth over the past year.

Home prices in Hobart are now -0.69 per cent below their recent price peak with the median price falling to $723,000. That is still a massive 48.2 per cent higher than they were at the start of the pandemic in 2020.

Price growth is also slowing in regional Tasmania, but outside Hobart prices are 54 per cent higher than they were in March 2020.

CoreLogic’s research director Tim Lawless said market conditions were likely to worsen as interest rates surge higher through the remainder of the year.

“The rate of growth in housing values was slowing well before interest rates started to rise, however, it’s abundantly clear markets have weakened quite sharply since the first rate rise on May 5,” Mr Lawless said.

“Although the housing market is only three months into a decline, the national Home Value Index shows that the rate of decline is comparable with the onset of the global financial crisis in 2008, and the sharp downswing of the early 1980s.”

The downturn is particularly sharp in Sydney where values are falling faster than any time in the past 40 years.

“Due to record high levels of debt, indebted households are more sensitive to higher interest rates, as well as the additional downside impact from very high inflation on balance sheets and sentiment,” Mr Lawless said.

Dwelling values fell -0.6 per cent in regional Tasmania in July but overall regional markets are still outperforming their capital city counterparts.

“The stronger growth reflects a significant demographic shift towards commutable regional markets, which is likely to have some permanency as more workers take advantage of formalised hybrid employment arrangements,” Mr Lawless said.

Unit values across the combined capitals are generally recording smaller falls relative to house values, with housing affordability challenges deflecting more demand towards the medium- to high-density sector.