RESIDENTIAL PROPERTY

Hobart prime residential outperforms

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HOBART was Australia’s best performing city for residential price growth in Australia over the 12 months to the end of June, while sales volumes across the world were hit by the pandemic at the tail-end of the period.

Turkish cities dominated Knight Frank’s latest Prime Residential Cities Index, occupying the top three rankings due to strong demand and constrained supply, along with a weakening Lira.

Izmir recorded the highest rate of annual growth in the year to June, with 28.1%, followed by Ankara (26.4%) and Istanbul (20.2%).

The top growth performer globally for Q1, Manila, was pushed back to fourth with 18.3%.

European cities account for two of the top 10 rankings, down from four 12 months ago. Luxembourg is the continent’s strongest performer, up 14%.

The Index tracks the residential prices across 150 cities worldwide using official statistics. Overall, it increased by 3.4% in the 12 month period, with 81% recording a price increase. The annual rate of growth declined marginally from 3.6% in March, but is still on par with most readings in 2018 and 2019.

Hobart came in at number 13 on the global list with 10.8%, while Sydney was Australia’s next-highest ranked city at 20 (9.4% growth). Melbourne was at 37 (6.8%) and Canberra at 39 (6.7%). All four cities posed growth of around double the average or more.

Knight Frank’s head of residential in Australia, Shayne Harris said several reasons were behind Hobart recording highest price growth in Australia. He said the relative value and lifestyle continues to be appealing with those from the mainland, amplified during COVID-19 with the rapid response to isolate the state, leading to fewer lockdown restrictions, and increased popularity from those seeking a regional tree-change, “especially now when we have officially seen the success in the adaptability of many white-collar workers working from their homes”.

Among the other Australian cities, Adelaide was at 95 (2.2%), Brisbane at 116 (0.5%), Perth at 131 (down 1.2%), and Darwin at 144 (down 5.1%).

Knight Frank’s head of residential research, Michelle Ciesielski said it was not surprising that the annual rate of residential price growth around the world had moderated given most housing markets were impacted by the COVID-19 pandemic in the second quarter, with many transactions unable to be completed.

“The volume of residential sales in Australia has reduced by close to 34% during COVID-19, but in saying that, there has only been a shallow number of listings on the market with little evidence of distressed sales.

“In the short term we expect further falls in housing prices to be cushioned by the ongoing low number of listings and a decreased number of new properties due for completion, with the proposed relaxation of responsible lending in early 2021 to shield against economic headwinds.”

Sydney continues to be underpinned by a severe shortage of stock for sale by both auction and private treaty, Harris said, reflected by the high clearance rates recorded.

Difficulties around obtaining finance has drawn out many Sydney sales and remains a hurdle, but he noted an increasing number of registered bidders at auctions.

“In some instances, we are once again seeing first home buyers being outpriced by downsizers and this is most likely to continue given their lower reliance on steady employment and a reasonable performing stock market.”

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