How far Hobart home prices could rise or fall in 2025

A leading property analyst has forecast likely pricing declines in Hobart next year, except for in one economic scenario.

Harrison Agents property representative Nick Cowley

AN early interest rate cut is the spark that Hobart needs to see property pricing push upward in 2025.

SQM Research released its annual Boom and Bust report overnight with some positive home value movement forecast as a possibility for the southernmost capital city.

The report offers four scenarios for the year ahead, with a March quarter rate cut combined with national population growth of over 500,000-plus, providing growth figures for Hobart in the range of 1-5 per cent.

In SQM managing director Louis Christopher’s “base case” scenario, Hobart prices would shift in the range of 3 per cent lower up to 2 per cent higher.

This would be on the back of a 25 to 50bp rate cut by mid-2025, 500,000-plus population growth and no new inflationary outbreaks.

Without a rate cut next year, he expects Hobart to dip up to 5 per cent.

The most downbeat scenario — with population growth falling to less than 400,000 people, no rate cut and stable commodity prices — would see as much as 8 per cent come off Hobart’s home prices.

SQM Research director Louis Christopher

This scenario is the least likely in his view and Mr Christopher is forecasting a rate cut of up to 0.5 per cent in the middle of next year on the back of moderating inflation and the overall economy continuing to record below-trend growth.

“If interest rates are cut as forecast, this event will immediately stimulate homebuyer demand across the country,” he said.

“Hobart will start 2025 off in the red. We are currently recording dwelling price falls in our two largest cities, Canberra and Hobart.

“Interest rates are biting the community more in these cities.”

Hobart’s current median house price, per PropTrack, is $700,000. At the top end, a 5 per cent increase would add $35,000 to the median value, while an 8 per cent decrease would wipe out $56,000.

Hobart's Central Business District from the air, against Mount Wellington from the air. Escape 28 January 2024 My Travel CV Photo - iStock

Mr Christopher noted Tasmania’s slow population growth, deteriorating affordability in recent years, diminished rental yields and rising listings as key factors in how the 2025 market will play out.

“Overall, I remain somewhat bearish on the Hobart housing market,” he said.

In last year’s report, Mr Christopher forecast a negative year for Hobart in the 7 per cent to 3 per cent downturn range. Currently, Hobart prices are down 1.2 per cent year-to-date.

Christopher’s Housing Boom and Bust Report can be purchased from the SQM website.