Recent interest rate reductions have been designed to boost economic activity, and have prompted banks to adjust mortgage rates. However, some buyers remain cautious and holding out for more anticipated rate cuts
Regional Tasmania has experienced an upward trend in sales activity over the past year, despite a lower number of new listings and properties taking longer to sell with many attracted to the value proposition
Property prices across Regional Tasmania have modestly recovered over the past year with a similar trajectory to continue over the next two years supported by a small number of new homes coming to market and improving buyer sentiment
Unless more homes are made available, rents are likely to keep climbing, adding to the cost-of-living pressures for many households
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 0.3%
Population growth increases housing demand as more people require places to live, encouraging more housing and infrastructure to be built in regional areas. As less people moved to Regional Tasmania following the pandemic, population grew by 0 6% in 2022, 0 4% in 2023 and 0 3% in 2024 The ABS have projected the long term population growth for Regional Tasmania at 0 5% in 2025 and 0 4% in 2026.
Source: McGrath Research, RBA, ABS
Regional Tasmania residential annual sale transactions tallied to 5,782 in the first quarter of 2025, an upward movement of 3% from the previous quarter Although over the past year, the total number was 33% higher. This was influenced by the total number of listings being 4 4% more in the four weeks ending March 2025 when compared to the equivalent period last year. Other factors include the improving lending environment with the market anticipating a further reduction in interest rates in the coming twelve months.
Total Number of Annual Sales Regional Tasmania
Source: McGrath Research APM
Share of State Annual Sales
Over the past year, Regional Tasmania (33%) far outpaced the annual growth of sales activity in Greater Hobart (-2%) As a result, the Regional Tasmania share of total number of annual residential sales in Tasmania was 57% at the end of Q1 2025 This was higher than one year ago when this proportion was 49%, and the 53% share of sales recorded five years ago
Share of State Annual Sales, by Number Regional Tasmania
Source: McGrath Research, APM
Source: McGrath Research, APM
Regional Tasmania homes took an average 99 days on market - from the time they were listed to the day they went under contract - in the March 2025 quarter This duration was 100 days the quarter before but 81 days one year ago Typically, apartments have sold faster than houses and this was no different in the past quarter Houses averaged 103 days to sell in Q1 2025, which was the same as in Q4 2024, but took 19 days longer than in Q1 2024 Apartments took an average 60 days to sell, being 7 days shorter than the previous quarter but 4 days more than a year ago A low number of days on market mean homes are selling fast with more desirable or undersupplied properties, while a high number of days suggests a slower market
Average Days on the Market Regional Tasmania
Source: McGrath Research
Newly advertised property listings in Regional Tasmania were 8 6% lower in the month of March 2025 than the equivalent period last year. This trended above the -4.8% average for the combined regional areas of Australia
Regional Tasmania’s total number of listings in the month of March 2025 were 4 4% above the equivalent period last year. By comparison, total listings were an average 0.7% higher across the combined regional areas of Australia
Source: McGrath Research, CoreLogic
Source: McGrath Research
Median Price
$526,000
Providing a benchmark for market performance, tracking median property prices helps identify emerging trends Residential property prices across Regional Tasmania rose by 4.9% in the year to March 2025, with a 1.6% increase recorded in the most recent quarter This brought the median value to $526,000, reflecting an overall steady upward trajectory in housing demand. Median house prices, at $537,500, are now growing faster than apartments, which are now at a median of $414,000 in Q1 2025 House prices were 1 8% higher than a quarter ago and 5 1% stronger over the year. Over the same quarter, apartments fell by 1.4% but overall were 2 2% higher in the past year
Change in Median Prices
Regional Tasmania
Source: McGrath Research
Price Outlook
+1%
Looking ahead, McGrath Research anticipates residential property prices to increase by 1% by the end of 2025, followed by a stronger 2% rise in 2026, after a two year period of price correction then upswing in Regional Tasmania. These projections reflect ongoing demand from limited housing supply, modest consumer confidence and recent lowered mortgage interest rates
Forecast for Median Prices
Regional Tasmania
Source: McGrath Research
Source: McGrath Research
Rental vacancy can have a significant impact on the residential property market, influencing both rental prices and property values. Regional Australia residential rental vacancy was recorded at 1 6% in Q1 2025, rising 6 bps in the quarter but in total, 5 bps higher 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 Regional
Source: McGrath Research
Yield
bps
Regional Tasmania residential gross rental yields remained stable in the Q1 2025 quarter to be 4 87%, although this was 8 bps more than a year ago Apartment yields (5 32%) have traditionally outperformed house yields (4 83%) across most markets. House yields compressed 1 bp in Q1 2025 but rose by 12 bps over the past year, while apartment yields were 4 bps higher in this past quarter but were 29 bps lower than a year ago. 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
Change in Gross Rental Yield
Regional Tasmania
Source: McGrath Research
Median Weekly Rent
Low vacancy is keeping rents on an upward trajectory in Regional Tasmania. Residential rents rose 1.1% in Q1 2025, while rents increased by 6 0% over the past year, to stand at $445 per week Median weekly house rents were $65 higher than apartments, growing by 1.1% in Q1 2025 to $450 per week, with 5 9% growth over the past year Apartment weekly rents, at $385, rose 2 7% in Q1 2025 and in the past year by 6 9%
Change in Median Weekly Rents
Regional Tasmania
While Regional Tasmania continues to experience a limited number of new homes being built to expand the rental pool and a steady growing population, McGrath Research forecast sustained upward pressure on rents of 4% at the end of 2025, with a further 4% rental growth likely in 2026
Forecast for Median Rents
Regional Tasmania
Source: McGrath Research
Regional Tasmania
Regional Tasmania refers to the area outside of ‘Greater Hobart’ or ‘Rest of State’ for Tasmania as defined by the Australian Bureau of Statistics
Michelle Ciesielski
Head of Residential Research, McGrath Research
michelleciesielski@mcgrath com au +61 414 694 220
www.mcgrath.com.au