The economy is showing signs of steady improvement as interest rates begin to ease, with returning buyer enquiry and renewed confidence helping to stimulate the Hobart property market
Hobart’s property market has recently seen a moderation in sales activity as increased listings meet cautious buyer demand, influenced by the expectations of future interest rate cuts
Winter/25
Hobart Residential
Property prices continue on an upward trajectory despite slower sales, supported by limited housing supply, improving buyer sentiment, and further price growth projected
Tenants continue to face pressure in the rental market, with limited housing available and keeping rents elevated. Until supply improves, affordability challenges are likely to persist in the household budget
The Economy Key Drivers
Interest Rate
3.85%
The Reserve Bank of Australia (RBA) lowered the interest rate target 25 bps to 3 85% in May 2025 Many banks followed this direction and adjusted their mortgage lending rates accordingly. Interest rates significantly influence the cost of borrowing money, which in turn affects the willingness and ability to apply for a home loan. The RBA forecasts the target could be 3 40% by the end of 2025, and 3 20% in 2026 When interest rates are lowered, borrowing becomes cheaper, which can stimulate demand for residential property and drive economic growth
Unemployment Rate
4.3%
Employment levels influence people’s ability to initially purchase a home and then the ongoing mortgage repayments servicing the loan The unemployment rate in Australia was 4 3% in March 2025, which is considered a healthy, balanced labour market given the rate falls within the ideal range of 4% to 5% The RBA forecasts the unemployment rate to rise by the end of 2025 to 4.3%, then remain relatively steady in 2026
Economic Growth
1.3%
Economic growth remains a key driver because it fuels job creation, boosts incomes, and increases demand across property markets Australia recorded economic growth at 1.3% in 2024, following stronger performance of 3.1% in 2022 and 1 5% in 2023 Looking forward, the RBA forecasts economic growth to lift to 2.1% in 2025 and 2.2% in 2026. Ideally, sustainable economic growth is considered to be around 2% to 3%
Population Growth
0.4%
Population growth increases housing demand as more people require places to live, putting pressure on existing housing supply and infrastructure. The Hobart annual population growth was 0 7% in June 2022, then slowed to 0 6% in 2023, to record 0 4% growth in 2024 The ABS have projected the long term population growth for Hobart at 1 0%
Source: McGrath Research, RBA, ABS
Residential Sales Update
Hobart residential sale transactions tallied to 960 in the first quarter of 2025, a downward movement of 13% from the previous quarter Over the past year, the total number was 2% lower, reaching 4,400 sales. This was influenced by the total number of listings being 3 8% lower in the four weeks ending March 2025 when compared to the equivalent period last year. Other factors include the tighter lending environment with fewer people qualifying for loans and market anticipating a further reduction in interest rates by the end of the year.
Total Number of Sales Hobart
Source: McGrath Research APM
Auctions
Hobart saw 3 property auctions held in the week ending 30 March 2025 According to CoreLogic, 0% of the homes were sold under the hammer. This was similar to one quarter ago at 0%, when 3 auctions were held By comparison, the same quarter last year recorded no auctions Clearance rates above 70% suggest strong demand and a seller’s market, while a rate below 60% indicates weaker demand and a buyer’s market
Auction Clearance Rate Hobart
Source: McGrath Research, CoreLogic
Hobart, Q1/25
Source: McGrath Research, APM
Residential Sales Update
Duration
78 days
Homes across Hobart took an average 78 days on marketfrom the time they were listed to the day they went under contract - in the March 2025 quarter This duration was 71 days the quarter before and 71 days one year ago Historically, houses have sold faster than apartments and this was no different in the past quarter Houses averaged 77 days to sell in Q1 2025, which was 6 days longer than in Q4 2024 and 7 days more than in Q1 2024 Apartments took an average 84 days to sell, being 17 days longer than the previous quarter and 3 days more than a year ago A low number of days on market mean homes are selling fast with more desirable properties, while a high number of days suggests a slower market with above market values
Average Days on the Market
Source: McGrath Research, APM
Newly advertised property listings in Hobart were 18 5% higher in the month of March 2025 than the equivalent period last year. This trended above the Australian average of 4 5%
Hobart’s total number of listings in the month of March 2025 were 3 8% below the equivalent period last year By comparison, total listings were 5.1% higher across Australia.
Source: McGrath Research, CoreLogic
Source: McGrath Research, APM
Residential Prices Update
Median Price
$688,000
Median property prices provide a benchmark for market performance and can help identify emerging trends Residential property prices rose by 2 4% in the year to March 2025, with a 0.7% increase recorded in the most recent quarter This brought the Hobart median value to $688,000, reflecting a recent steady upward trajectory in housing demand and resilience returning to the market. Median house prices, at $710,000, have experienced more growth over the past year than apartments now being at $555,500 in Q1 2025 House prices remained steady from a quarter ago but were 2.6% over the year. Over the same quarter, apartments rose by 6 5% after 0 8% growth in the past year
Change in Median Prices Hobart
Source: McGrath Research, APM
Price Outlook
+2%
Looking ahead, McGrath Research anticipates residential property prices to increase by 2% by the end of 2025, followed by a stronger 3% rise in 2026 These projections reflect ongoing demand from limited housing supply, lowered interest rates and improving consumer confidence, suggesting a gradual recovery in the housing market over the next two years
Forecast for Median Prices Hobart
Source: McGrath Research
Source: McGrath Research, APM
Residential Rents Update
Rental vacancy can have a significant impact on the residential property market, influencing both rental prices and property values. Hobart residential rental vacancy was recorded at 1 9% in Q1 2025, remaining stable in the quarter and overall, 50 bps lower over the past year Generally, 3% vacancy is considered a balanced market between rental supply and demand Below this benchmark is considered to be an undersupplied pool of rental homes
Change in Residential Rental Vacancy
Hobart
Source: McGrath Research REINSW
Yield
+18 bps
Gross rental yields are a good initial measure of comparing the return of a property investment before expenses are deducted A range of 4 00% to 5 00% is considered good for many properties located in a capital city, while below this, may indicate high property prices relative to rent, or low rental demand Hobart residential gross rental yields rose 18 bps in the Q1 2025 quarter to be 4 53%, while this was 17 bps higher than a year ago. Across most other capital cities, apartment yields (at 4 64%) tend to outperform house yields (4 51%) but this hasn’t always happened this way in Hobart given the preference of houses due to relative value by investors House yields rose 15 bps in Q1 2025 and by 15 bps over the past year, while apartment yields were 34 bps higher in this past quarter and 26 bps higher from a year ago
Change in Gross Rental Yield
Source: McGrath Research, APM
Hobart
Source: McGrath Research APM
Residential Rents Update
Median Weekly Rent $555
Lower vacancy is holding rents elevated across Hobart Residential rents rose 3.7% in Q1 2025, while rents increased by 3 7% over the past year, to stand at $555 per week
Median weekly house rents were $90 higher than apartments, growing by 3.6% in Q1 2025 to $570 per week, with 3 6% growth over the past year Apartment weekly rents, at $480, rose 4 3% in Q1 2025 and in the past year by 4 3%
Change in Median Weekly Rents
Hobart
Source: McGrath Research APM
Rental Outlook +1%
While Hobart continues to experience tight residential rental supply and delayed new housing completions, McGrath Research forecast sustained upward pressure on rents of 1% at the end of 2025, with a further 2% rental growth likely in 2026
Forecast for Median Rents
Hobart
Source: McGrath Research
Source: McGrath Research,
Hobart
Hobart refers to the Greater Capital City Statistical Area or ‘Greater Hobart’ as defined by the Australian Bureau of Statistics
