Heat out of real estate market

INDUSTRY experts believe Tasmania’s real estate market is cooling off, with fewer sales in the past three months and interest rate increases impacting buyer confidence.

A new Real Estate Institute of Tasmania quarterly report released today shows sales numbers for the first six months of this year are down 10.5 per cent on the same period last year and 6.3 per cent on the previous quarter.

REIT Tasmanian president Michael Walsh said the situation was more pronounced on the mainland, which had been seeing much more dramatic price falls in recent months.

The June quarter saw Tasmania’s median house prices grow a modest 2.6 per cent, with unit prices remaining more or less stable.

It’s a far cry from the eyewatering price surges seen across the board during the two-year pandemic period.

Mr Walsh said he anticipated the market to return to its more normal rhythms in the months ahead.

“Coming off the year we had last year, there was always going to be a peak somewhere – a market like that can’t sustain itself,” he said.

“I would say we still have a relatively robust market in Tasmania and we’re not seeing valuation for properties fall dramatically. I think we’re dealing with a transitional market, whether due to interest rates or natural market forces.”

Rental property vacancies are still at critically low levels, 1.1 per cent in Hobart, 0.9 per cent in Launceston and 1.2 per cent in the North West.

This has corresponded with significant rent hikes, rising $25 per week in Hobart and $10 across the North West for the July quarter period.

Battery Point’s sales made it Tasmania’s most expensive suburb with a median sale price $1,620,000, overtaking Sandy Bay’s $1,440,000.

Mr Walsh said Tasmania was suffering an ongoing shortage of housing, compounded by a number of consecutive interest rate hikes.

The report notes investment numbers quarter on quarter dropped an “alarming” 20.8 per cent. “Of real concern is a retracting rental market which is already under extreme pressure,” he said.

“The lack of investment in this sector is of real concern. I cannot see any short-term solutions to resolve this issue.”