Often overlooked in our national landscape, Canberra and Hobart are two Australian capital cities that have made waves in the property sector this year.
The two underdogs are now sitting near the top of the highest growing capital cities in the country, based on Domain Group data on median house price growth over the past 12 months.
Trailing Melbourne, Hobart came in at second position with a median price growth of 12.1 per cent. The nation’s capital came in at third place with a growth of 9.1 per cent.
The future looks bright for the two with the SQM Housing Boom and Bust Report predicting they will continue to be two of the best performing capital cities in 2018.
So why have Canberra and Hobart done so well and how do they compare?
Population: 403, 468 (2016 census)
Median price: $712,975 up 9.1 per cent in 2017
Most expensive suburb: Forrest, median price of $3,200,000
Highest sale in the last 12 months: $6 million + (55 Banks Street, Yarralumla)
Although the price is yet to be released ‘Westridge House’ at 55 Banks Street is tipped to be Canberra’s highest sale for 2017. Photo: Supplied
In recent years, Canberra’s median house price has skyrocketed to the third highest median in the country. In April this year, the median price of the city surpassed $700,000 for the first time.
Allhomes data scientist Dr Nicola Powell said changeover buyers (second and third home buyers) are fuelling the ACT market. This is alongside a high average income.
While Canberra, has a high average income, vulnerable people struggle with rental accommodation. For groups such as pensioners and single parents, the ACT has the second least affordable rent in the country.
Another problem facing the market is an oversupply of dwellings, which was examined in an Australian National University report – Regional Housing Supply and Demand in Australia.
ANU associate professor Ben Phillips told The Canberra Times in November the ACT had a surplus of 6700 dwellings.
“In time they will become occupied but for the moment we do have significant supply and this suggests that housing development need not be as high as it currently is,” he said.
Although there is an oversupply, vacancy rates in the nation’s capital hover around 1 per cent – they are one of the lowest in the country.
Population: 224, 462 (2016 census)
Median price: $400, 534 up 12.1 per cent in 2017
Most expensive suburb: Sandy Bay, median price of $803,000
Highest sale in the last 12 months: $6.5 million (650 Sandy Bay Road, Sandy Bay)
‘Sentosa’ at 650 Sandy Bay Road is Hobart’s highest ever sale at $6.5 million. Photo: Knight Frank
While Hobart is finishing 2017 with the second highest median price growth it still has the lowest median price out of the capital cities and falls under the national average by $402,695.
Real Estate Institute of Tasmania president Tony Collidge attributed Hobart’s market growth to a multitude of factors.
“We had a change in government four years ago to one that could lead in its own right and that gave people a lot of confidence, which resulted in an improving economy with more jobs,” he said.
“We also had a rapid growth in our tertiary participants and we’ve also had an absolutely booming tourist industry.”
While Canberra is facing an oversupply, Hobart is having the opposite problem due to an increasing population.
“There’s a real shortage of real estate in Hobart, we are about 5000 dwellings short,” said Coolidge.
“We have a dire shortage of inner city apartment accommodation. Prices have doubled in this area and it is attractive for developers but a planning scheme is limiting new apartments.”
Vacancy rental rates in the Tasmanian capital are sitting at an extremely low level of 0.2 per cent. Rent is considered to be moderately unaffordable in Greater Hobart.