So why do we even have a rental affordability crisis?
The rental crisis in Hobart has been caused by a combination of structural, economic, and policy-related factors. Here’s a breakdown of the key contributors.
- Lack of Investor Confidence
- Investor withdrawal from the market due to rising interest rates, reduced rental yields (especially after property management fees, insurances, and maintenance), and uncertainty around housing policy has led to fewer rental properties being made available.
- Negative sentiment around property investment—particularly in Tasmania—has been affected by government regulation and tax disincentives, pushing many landlords to sell or exit the market entirely.
- Supply Not Matching Demand
- Construction activity has lagged behind population growth, especially for affordable, long-term rental housing.
- Most of the new builds have been high-end properties or short-stay/furnished homes, which do not serve the low-to-middle income rental demographic.
- Limited land release and slow development approval processes further compound the issue.
- Furnished & Short-Term Rentals
- The growth in furnished listings, particularly after projects like the Bridgewater Bridge, shows a market catering more to transient workers or short-stay renters than long-term residents.
- Platforms like Airbnb have also diverted stock away from long-term rentals, especially in high-demand, inner-city areas.
- Wage Stagnation vs. Rent Increases
- While rents have skyrocketed, wages have not kept pace, especially for lower and middle-income earners.
- This creates a significant affordability gap, with fewer and fewer properties within reach of essential workers and families.
- Population Pressure
- Tasmania’s growing popularity as a lifestyle destination has driven net migration, particularly into Hobart.
- This increased demand puts pressure on a market that already had low vacancy rates and limited stock.
- Seasonal Trends & Mismatched Supply
- Winter traditionally sees lower demand, particularly for furnished properties. As these linger on the market, they offer little help to families in need of unfurnished, affordable housing.
- Mismatch between what is being offered and what is actually needed—too many high-end listings, not enough practical family homes.
- Separation & Divorce
- In most situations where a relationship breakdown occurs, extra accommodation is required by at least one or both parties. Even though the ABS statistics show a slight decline over the past 20 years in the percentage of break ups we have had significant population growth in that time which means the percentage is now for a greater aggregate of people.
- Renovations & Improvements
- The TV fuelled renovation boom of the early 2000s has evolved into a favourite Australian hobby whereby it’s not only spec builders but professional and part time “Property Flippers” (for the record I detest this term) in addition to private and commercial investors looking to improve their properties seeking higher returns on their investment.
- Life Expectancy
- We are simply living longer & healthier lives. Many retirees are able to stay in their family homes rather than downsizing or looking for independent living options due to the many modern and contemporary fit outs available to cater for the aged and aging.
- This is generally more significant in regional areas where the need to move to be closer to family and services is not as impactful as a major capital city.
- Agents & Owners
- Owners & landlords understandably want the best possible return for their investment particularly as most (if not all, plus some) of the rent is passed on to the bank!!
- Agents want the business but are regularly in competition with each other to win the listing. This invariably leads to price inflation as the sad reality is that many owners are seduced by the “highest price & lowest fee!!
I have purposely not offered solutions to each category, as this is an intended objective snapshot of real estate observations made over the past 40 years as an agent, landlord and homeowner. What this illustrates is a number of contributing factors that can affect a property market and trying to target a handful of sectors (e.g. Airbnb & Immigration restrictions or Stamp Duty exemptions) is going to fall well short of what is required.
For instance, placing fees, tariffs, restrictions on Airbnb properties will have all but zero effect on long term rentals (particularly in suburbs) as the majority of these homes fall in the high-end category and will do little to address affordability.
If anything, this is about reinforcing the fact that the structure of our housing market is fundamentally broken!
We need tax reform across all levels of Government to enable extra funds to be directed into Social Housing because the problem has to be addressed at the grassroots level to have an impact.
Additionally, removal of red tape in the application and approvals process will assist in garnering renewed confidence from private investment and enable a more streamlined approach to residential development.
Market Snapshot Properties Available realestate.com all categories :-
September 1 2025: 247
August 1 2025: 295
September 2024: 340
