As we step into 2025, the Tasmanian real estate market stands on the cusp of a fresh chapter, shaped by a variety of economic influences. These range from shifting interest rates to the evolving needs of buyers, and government policies designed to help first-time homeowners. For many, this year promises a period of adjustment and potential opportunity, offering a steadier market after a few years of uncertainty.
A Shift in Interest Rates and Mortgage Relief
One of the key changes on the horizon is the potential for interest rates to fall. The Reserve Bank of Australia (RBA) has kept the official cash rate at 4.35% for more than a year, but economists are predicting a 25 basis point reduction in February 2025. This would be the first cut since 2020 and could provide much-needed relief to homeowners facing high mortgage repayments.
According to Canstar's data insights director, Sally Tindall, the cost of wholesale fixed funding has started to ease, which, combined with the expected cash rate cut, could prompt other banks to reduce fixed rates. Many homeowners might see their monthly repayments drop significantly if the banks pass on the full rate cut. For instance, on a $750,000 loan, a 25 basis point cut could result in savings of around $229 per month. If more cuts follow throughout the year, even bigger savings could be on the horizon.
However, not all borrowers will experience immediate relief, especially if banks decide to withhold the rate cuts. But the pressure from both customers and policymakers will likely drive banks to adjust their rates in the months ahead, and it’s something borrowers should keep an eye on.
Hobart's Steady, Stable Market
As Tasmania’s capital, Hobart remains a central player in the state’s real estate landscape. While its growth has cooled since the high-flying days of 2021, Hobart is poised for a year of more stable growth in 2025. The city’s median house prices are expected to grow at a moderate pace, which, while less dramatic than in the past, provides a more sustainable and less volatile environment for both buyers and investors.
Despite the slower pace of price increases, Hobart’s relative affordability compared to mainland capitals like Sydney and Melbourne continues to make it an attractive option for buyers, particularly those seeking a more peaceful and affordable lifestyle. Whether it’s first-time buyers, those looking for investment opportunities, or people relocating for lifestyle reasons, Hobart will continue to offer an appealing combination of value and lifestyle.
Government Support for First-Time Homebuyers
For first-time homebuyers, 2025 holds promise with ongoing government support. Programs like the First Home Guarantee and First Home Owner Grant are making it easier for buyers to enter the market, particularly in more affordable areas or regional parts of Tasmania. These initiatives along with many receiving assistance from the bank of Mum and Dad, continue to offer opportunities for those looking to secure property with low deposits, easing some of the affordability pressures that have made homeownership a challenge for many.
As homeownership becomes more accessible for first-time buyers, the demand in suburban and regional areas is expected to rise. These areas still hold significant potential for capital growth, offering a balanced approach to both affordability and long-term investment.
Population Growth and Economic Opportunities
Hobart’s population has been steadily increasing and is expected to continue this growth in 2025, albeit at a more moderate pace compared to larger mainland cities. As of 2023, Hobart’s population was approximately 250,000, and by 2025, it could reach around 260,000 to 270,000. Factors driving this growth include in-migration, a growing tourism sector, and developments in new industries like technology and the creative sectors.
This population growth, combined with infrastructure improvements and new housing developments, will create a steady demand for properties, especially in the more affordable suburbs and regional areas. As Hobart’s economy diversifies and its lifestyle appeal continues to attract new residents, the real estate market will see a broad mix of buyers and sellers.
Interest Rates and Market Stabilisation
The role of interest rates in the Tasmanian market cannot be overstated. As rates have remained high throughout much of 2024, they have cooled demand, limiting price growth. But with the possibility of rate cuts in early 2025, the market is expected to stabilise further. High rates have pushed many potential buyers to the sidelines, but if the cash rate decreases, it could reignite demand and bring more buyers back into the market.
The Role of Interstate Buyers
Tasmania’s real estate market continues to benefit from interest from interstate buyers. While the pandemic-driven rush has slowed, mainland Australians, particularly those seeking more affordable living options and a change of lifestyle, are still keen on investing in Tasmania’s properties. This demand is especially strong in Hobart and coastal regions, where affordability and lifestyle factors continue to draw attention.
For high-net-worth individuals, certain areas of Hobart will continue to offer luxury properties, particularly those in the $1 million-plus range. However, the broader market will likely remain more accessible, with a focus on affordability and long-term investment potential.
What’s Ahead for Tasmania’s Property Market in 2025?
The Tasmanian property market in 2025 is set to be a year of careful growth. With interest rates potentially lowering and economic conditions stabilising, buyers and sellers alike can expect a market that feels more balanced than the rollercoaster years of the previous decade. While price growth may not be as explosive as in the past, the overall stability of the market will make it an attractive option for a variety of buyers—from first-timers to seasoned investors.
Government support, rising population figures, and the continued allure of Tasmania’s lifestyle will all contribute to the ongoing strength of the market. In particular, Hobart’s mix of affordability and lifestyle appeal makes it a key area for investment. So whether you're looking for your first home or seeking long-term growth in Tasmania’s real estate sector, 2025 promises a stable, promising year ahead.
This information, based on a February 2025 report by ABC, highlights a positive outlook for the state’s housing market, where moderate growth, more accessible housing, and the potential for interest rate cuts should offer new opportunities for those entering or already active in the market.