Hobart sets hot pace in housing

HOBART has continued to buck the trend of the national housing market slowdown.

The market is looking weak on a national level with dwelling values falling for the 11th month in a row and Melbourne booking its worst numbers since 2012.

Five of the eight capitals recorded lower housing prices over August, led by Melbourne and Perth where values fell 0.6 per cent, according to the CoreLogic national home value index.

However, Hobart was up an astonishing 10.7 per cent on this time last year.

The once white-hot investor-driven Sydney market dropped another 0.3 per cent last month and is now down 5.6 per cent over the past year, the sharpest fall of all the capitals.

Melbourne recorded a 2 per cent quarterly drop, the worst result since the three months to January 2012.

Nationally prices have been trending lower amid regulatory clamps on bank lending and buyer exhaustion and the market is tipped to stay subdued.

“Our expectation is that the spring selling season’s going to be pretty quiet this year,” CoreLogic research analyst Cameron Kusher said.

Mr Kusher said major lenders were likely to follow Westpac’s lead and lift interest rates on mortgages, a move which could further slow demand.

“You typically see the lenders offering incentives coming into spring — enticer rates on mortgages — and from what I’ve seen there’s really been none of that this year,” he said.

Despite the falling prices in other states, the overall market is much healthier than first appears as homeowners who bought at the start of the boom have seen strong capital growth.

Sydney values soared 72.7 per cent over the five years to their peak last year and have since fallen 5.6 per cent, while Melbourne values jumped 57.1 per cent in the five years before peaking and are since down 3.5 per cent.

Mr Kusher expects prices to fall about 5 to 10 per cent from peak to trough, but is watching the falls and may revise his forecast in coming months.