Gigantic growth forecast for Hobart

Could Hobart home values rise by 19 per cent this year and further still in 2022? One of the big four banks has forecast they will. READ THEIR PREDICTIONS >>

EXTRAORDINARY home value growth has been forecast for Hobart by one of the big four banks.

In its latest Residential Property Survey, the National Australia Bank has shifted its prediction for the southernmost capital about 10 per cent higher than its already positive price prediction in December.

The bank sees Hobart pricing lifting by a whopping 19.1 per cent this year, up from its 9.7 per cent forecast last quarter.

In a sign of just how hot the property market is nationwide, each capital city — Sydney, Melbourne, Brisbane, Adelaide, Perth and Hobart — had forecasts in double figures, from 11.2 per cent in Adelaide up to 19.1 in Hobart.

The Hobart market is then expected to steady next year, with experts predicting a 6.1 per cent rise.

The survey noted housing market sentiment had lifted sharply and that low interest rates, alongside a strong recovery in the economy and labour market, were key drivers.

Huge growth in home values would be no surprise says REIT president Mandy Welling.

The forecast comes not far behind Hobart’s median dwelling value — houses and units combined — hitting $548,686 in March, per CoreLogic.

That figure was $65,654 higher than at the same time last year, and higher than Brisbane, Darwin, Adelaide and Perth for the first time since mid-2018 when Hobart’s annual growth figure was last in double digits.

The bank has forecast an uptick in rental prices, too.

Real Estate Institute of Tasmania president Mandy Welling said with Tasmania’s considerable statewide shortage of property, it was “no real surprise” that the NAB had predicted growth over the coming months and years.

“We are yet to feel the impact of the relocation of the interstate market, which has shown signs of a possible surge at this early stage,” she said.

“With the bank’s prediction of a 3.8 per cent increase in the rental market, this would place more pressure on an already stressed market sector.”

Mrs Welling said while property values continuing to climb was not surprising, the prediction of a 19.1 per cent growth was “nothing short of phenomenal”.

Values climbing higher and higher.

“There have been many times we have been surprised at the constant strength and growth in our local market, but it just continues to gather momentum,” she said.

“I believe we will see an increase in the first home buyer market and hopefully the prediction of increased investor activity holds true.

“We are a rental market in need and the last thing we can afford is for the investor market to recede or, indeed, a large number of existing rental properties to come to market and disappear from the stock list.

“Another level of security is to cast our eye around the country and see the resilience and growth happening now; this is a good sign for Tasmania.

“It is a world away from the doom and gloom predicted as COVID-19 launched its attack on the globe.”

NAB group chief economist Alan Oster in Hobart.

NAB group chief economist Alan Oster expects national dwelling prices to rise by about 14 per cent this year and 6 per cent next year.

“Hobart is expected to rise strongly over the year, but has already risen significantly since December,” he said.

Mr Oster said with interest rates remaining low and prices expected to rise sharply over the next couple of years, it was likely that policy makers would be closely monitoring risks in the housing market.

“Macroprudential tools may again be applied to cool the housing market (or segments) deemed to face rising risks,” he said.