2025 Guide to Property Investment in Tasmania

Tasmania has long been Australia’s hidden gem for property investors, but in the lead up to and especially during the COVID years, the island state moved firmly into the spotlight. The relatively cool market of the last 2-3 years cooling combined with the island’s lifestyle appeal, improving infrastructure, and relatively affordable prices create fertile ground for strong rental yields and potential long-term capital gains.

Whether you’re a seasoned investor or exploring your first investment property in Tasmania, this updated 2025 guide cuts through the noise, arming you with the latest figures and strategies tailored to help investors succeed in buying property in Tasmania.

Why Invest in Tasmania?

Tasmania’s property market has experienced significant growth over the past decade. Nearly 95% of Australians selling in early 2025 made gains, with a median profit of $305,000.

As of mid-2025, the median house price in Hobart sits around $712,000, while regional areas average $549,000. Market forecasts remain positive: Bank of Queensland anticipates 7% growth in Hobart for 2025, after a 4% rise in 2024. PropTrack forecasts Hobart’s capital growth to be modest between 0% and 3%, representing a potential $21,000 increase on a $700,000 dwelling.

Key reasons investors are drawn to Tasmania include:

Strong rental yields – Lower median house prices compared to mainland capitals often mean more favourable rental returns. Rentals under $400/week have declined sharply from 32.4% of listings in 2020 to just 10.9% in 2024.

As of April 2025, the gross rental yield averages are:

• Houses in Hobart: 4.1%

• Units in Hobart: 4.7%

• Regional Houses/Units: 4.4 – 4.8%

Population growth – High interstate migration has long been a strong driver of Tasmanian housing demand, especially in Hobart and surrounding areas. Vacancy rates are among the lowest in Australia: Hobart sits between 0.6% and 0.9%, while some areas drop to 0.3%.

Lifestyle and tourism appeal – Tasmania’s clean environment, slower pace, and access to nature are attracting a new wave of residents. Major infrastructure developments like the new Bridgewater Bridge and the proposed Macquarie Point Stadium are boosting investor confidence, while the Tasmanian economy is diversifying past tourism and agriculture into the education, arts and technology sectors.

Best Locations for Property Investment in Hobart and Beyond

When it comes to property investment in Hobart, location is everything. Popular investment areas include:

• Hobart CBD and Inner Suburbs - Consistent demand from students, professionals, and tourists. Median price $710k – $735k; annual growth ~2.6%

• Glenorchy (Hobart’s Periphery) - Featured in realestate.com.au's Hot 100 Suburbs for 2025 for its affordable entry points with strong rental markets.

• Kingston (Hobart’s Southern Corridor) - Currently one of the most promising growth corridors in Greater Hobart. Other notable suburbs include Glebe and Moonah. Median price $743k; annual growth ~1.4%

• Launceston and Regional Centres - Northern Tasmania’s largest city, offering lower prices with solid yields. Canstar's 2025 Picks for their appeal to long-term investors include Acton, Norwood, Primrose Sands, and Ravenswood. Median $550k – $585k; annual growth ~4.8%

Financing Your Tasmanian Investment Property

There are multiple pathways to secure your first - or next - investment property in Tasmania, and many are surprised by just how accessible it can be.

Here’s how it typically works:

• Equity as a deposit - If you already own a home or another investment property, you can use the equity (the difference between the property’s market value and the remaining mortgage) as security for the new loan. Lenders usually allow you to borrow up to 80% of the property’s value without paying Lenders Mortgage Insurance (LMI), or up to 90 – 95% with LMI.

• Investment Loan - Most investors choose either an interest-only loan (to maximise cash flow and tax deductions in the short term) or a principal-and-interest loan (to reduce debt over time).

• Offset accounts - Often linked to the loan to reduce interest payable, giving investors flexibility for future purchases.

• Negative gearing - Negative gearing occurs when the rental income from your property is less than the expenses needed to hold it, most often because interest repayments outweigh the rent you collect. While this creates a short-term loss, the main attraction lies in the tax benefits: losses on a negatively geared property can often be offset against your taxable income, easing the impact in the short term.

It’s important to factor in upfront and ongoing costs. Stamp duty is generally payable within three months of settlement. For example, a $700,000 property attracts around $28,835. Land tax is assessed annually and calculated based on the value of the property: properties between $25,000 and $349,999, the annual land tax is $50, plus 0.55% of the value above $25,000. Properties valued at $350,000 or more incur a base fee of $1,837, plus 1.5% of the value above that threshold. The Tasmanian Government’s Property Transfer Duty Calculator is a useful tool to get a precise estimate for your property.

Duel it out with the bank, or use a mortgage broker?

Using a mortgage broker can make investing simpler and more affordable than simply approaching your local bank. Brokers have access to a wide range of loan products from multiple lenders, whereas a bank usually only offers its own products. Brokers also provide tailored advice based on local market knowledge, helping you choose the right loan for your investment strategy. They handle the paperwork, negotiate terms, and can often secure faster approvals. Importantly, mortgage brokers are legally required to act in your best interests, whereas banks are not bound by this obligation.

Working with a mortgage broker can make a real difference in maximising returns and navigating the property market – which is where Three Capes Finance comes in!