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Posted: 2023-01-02 18:23:50

A decrease in buyer FOMO — fear of missing out — and rising interest rates have combined to push Hobart property values down by nearly 7 per cent in 2022. 

Hobart dwelling prices declined 5 per cent in the last quarter of 2022, and 1.9 per cent in December alone, according to the latest data from property analysts CoreLogic.

The 6.9 per cent drop in value over the year was the third greatest of any Australian capital city, behind only Sydney (-12.1 per cent) and Melbourne (-8.1 per cent). 

Nationwide, property values are down 5.3 per cent this year, the first fall in national values since 2018. 

The median value of a property in Hobart is now $673,333, still well above the median price of $488,968 recorded in February 2020, just before the pandemic boom.

A high level of savings, cheap loans and the fear of missing out were largely blamed for the "buying frenzy" that saw Hobart property prices increase 37.7 per cent from pre-pandemic levels to the peak in May this year. 

Since that May peak, values are down 9.3 per cent.

"As soon as the Reserve Bank announced that they would be officially increasing interest rates we started to see a bit of a calming of the market, and that seems to have been quite consistent," Mandy Welling, from Exceed Property, said. 

"I think people were preparing for a plummet. I haven't seen anything like a plummet, but we certainly did see a cooling of the market, which I would attribute to interest rates." 

Eight interest rate hikes in a row, to a 10-year high of 3.10 per cent, have significantly reduced people's ability to borrow, and therefore put downward pressure on prices. 

But despite what you might think, Ms Welling said many agents were "really happy" to see a sense of calm return.

President of the Real Estate of Institute of Tasmania Mandy Welling stands in a courtyard.
Mandy Welling says real estate agents are happy to see a sense of calm return to the market.(ABC News: Laura Beavis)

"We're still getting the price we're looking for — or somewhere very close to it — but there just doesn't seem to be that excessive speed that was driving those higher prices, where people have that fear of missing out and were launching in with these huge offers.

"We're starting to do open homes again … and we're seeing people make educated decisions now that the property market has cooled down." 

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