---
title: "Stop Telling Me Tasmania Is the Next Big Thing. It Isn't."
description: "Tasmania's population growth is temporary migrants who leave. Victoria's 3-year GDP increment exceeds Tasmania's entire century GDP. Infrastructure comparison: Hobart stadium vs Frankston Hospital."
author: Joey Don
date: 2024-09-09
category: Market Analysis
url: https://premiumrea.com.au/blog/tasmania-property-investment-warning
tags: ["Tasmania", "Hobart", "property investment", "population growth", "Melbourne", "Victoria", "interstate comparison", "market warning"]
---

# Stop Telling Me Tasmania Is the Next Big Thing. It Isn't.

*By Joey Don, Co-Founder & CEO at PremiumRea — 2024-09-09*

> Every few months someone sends me a Domain article about Hobart's property boom and asks whether they should buy there. My answer hasn't changed in five years: no. Let me show you why the numbers don't work — and why Victoria at $800K beats Tasmania at $400K every single time.

I'm going to upset some people with this article. Specifically, anyone who bought an investment property in Hobart between 2017 and 2021 and is currently watching their equity stagnate while their interstate mates in Melbourne's southeast are up 15-20% since COVID.

Tasmania had a moment. I'll give it that. Between 2016 and 2020, Hobart's median house price nearly doubled — from around $340,000 to $570,000 [1]. Growth rates that made mainland capitals look pedestrian. Real estate agents down there were popping champagne. Domain and realestate.com.au ran breathless articles about Hobart being "Australia's hottest market."

Then the music stopped.

Hobart's median has been dragging since mid-2021. Price growth has slowed to low single digits while Melbourne's outer southeast has surged. The fundamentals that drove the boom — population growth, low base prices, fear of missing out — are either temporary, exhausted, or both.

I've looked at the data from every angle. Tasmania will grow. Slowly. Modestly. But it will not double again in the next seven years. And for an investor with $400,000-$500,000 to deploy, the opportunity cost of buying in Tasmania instead of Melbourne's growth corridors is staggering.

Let me show you why.

## The population growth myth: temporary migrants who leave

The single most cited argument for Tasmania property investment is population growth. And on the surface, the numbers look good. Tasmania's population grew by approximately 1.2% annually from 2016 to 2020, which is respectable for a state that spent the prior decade effectively flat [2].

But dig into the composition and the story changes.

A large share of Tasmania's recent population growth came from two sources: interstate migration (mainlanders moving down for lifestyle or affordability) and international students or temporary visa holders using Tasmania as a pathway to permanent residency. The Australian Government's designated area migration agreement (DAMA) and state-nominated visa programs gave points advantages to applicants who settled in Tasmania. Live in Hobart for two years, get your PR, then move to Melbourne or Sydney where the jobs actually are [3].

This is not organic population growth. It's gaming the migration system. And the data confirms it: Tasmania has one of the highest rates of interstate outmigration among recent PR holders. People arrive, get their visa status, and leave [3].

The ABS projects Tasmania's population to grow from approximately 541,000 in 2021 to 570,000-590,000 by 2031 — an addition of 30,000-50,000 people over a decade [2]. Compare that to Victoria's projection: from 6.6 million to approximately 8.0 million over the same period — an addition of 1.4 million people. Melbourne alone will add more people in two years than Tasmania will add in ten.

Population drives housing demand. Housing demand drives prices. Tasmania's demand pipeline is a garden hose. Victoria's is a fire hydrant.

And here's the uncomfortable truth about the migrants who stay. Many settle in Hobart's northern suburbs or Launceston's fringe — areas where they compete for the same entry-level jobs in retail, hospitality, and aged care. The employment base in these areas simply doesn't generate the income growth needed to push property prices upward at the rates investors expect. A city needs high-income job creation — healthcare, education, professional services, government — to sustain property price growth above 5% per year. Hobart's economy produces pockets of this. But not at the scale required to lift an entire property market.

> "People confuse a temporary migration spike with a structural growth trend," says Joey Don. "Tasmania's population growth is a loophole story, not a jobs story. When the migration rules change — and they always change — the pipeline dries up."

## Income ceiling: the lowest in Australia

Even if Tasmania's population grew faster than projected, there's a hard ceiling on how high property prices can go. That ceiling is household income.

Tasmania has the lowest median household income of any Australian state or territory. The ABS 2021 Census recorded a median weekly household income in Greater Hobart of approximately $1,462 — compared to $1,759 in Greater Melbourne and $1,829 in Greater Sydney [4]. On an annual basis, that's roughly $76,000 in Hobart vs $91,500 in Melbourne.

Property prices are ultimately tethered to what local buyers can service on a mortgage. A household earning $76,000 can comfortably service a mortgage of roughly $380,000-$420,000 (at the standard bank assessment of 6x income with a 30% debt-service ratio). That's a purchase price of $475,000-$525,000 with a 20% deposit.

Hobart's median house price in early 2022 is sitting around $640,000 [1]. That's already above what the median local income can comfortably support. Which means further price growth depends entirely on external buyers (interstate investors, cashed-up mainlanders) continuing to inject demand. The moment external demand pauses — as it has since mid-2021 — prices stall.

In Melbourne's southeast, median household incomes in growth corridors like Casey and Cardinia sit at $85,000-$95,000 [4]. At $650,000-$700,000 median house prices, these suburbs are at or slightly below the income-serviceability threshold. Local demand supports the price floor. You don't need interstate speculators to keep the market moving.

Rental income tells the same story. Hobart's median weekly rent for houses is approximately $450-$480. Melbourne's southeast growth corridors rent at $420-$500 for houses, with the option to add a granny flat for $370-$500 additional weekly income [5]. On a $650,000 Melbourne property with a $110,000 granny flat build, you're earning $870-$950 per week. On a $640,000 Hobart property, you're earning $460. The rent ceiling in Tasmania is set by the income ceiling. There's no way around it.

## Infrastructure comparison: placebos vs catalysts

This is the section where Tasmania supporters get angry. But the numbers are the numbers.

Tasmania's flagship infrastructure project as of 2022 is the proposed Hobart stadium — a $715 million multi-purpose venue intended to support Hobart's AFL bid and revitalise the Macquarie Point precinct [6]. It's a big number. And it's essentially a consumption project. A stadium creates temporary construction jobs, generates event-day hospitality revenue, and provides a civic amenity. What it doesn't create is permanent high-income employment or sustained population attraction.

Compare that to what's happening in Melbourne's southeastern corridors.

The Frankston Hospital redevelopment: $1.1 billion. This project creates permanent healthcare infrastructure — 120 additional beds, expanded emergency department, new operating theatres, and an integrated mental health facility. It will employ approximately 1,500 additional permanent staff at healthcare salaries ($70,000-$150,000 per year). Every single one of those employees needs housing within commuting distance [7].

The Cranbourne Line Upgrade: $2.8 billion. Station rebuilds, track duplication, level crossing removals. This directly improves transport access for 200,000+ residents across Cranbourne, Clyde, and Pakenham — suburbs where we actively buy. The transport upgrade doesn't just serve existing residents; it enables future population growth by expanding the commuting catchment [8].

The Suburban Rail Loop (southern section): $30+ billion. A metro-style orbital rail connecting Cheltenham through Clayton, Monash, and Glen Waverley. This is the single largest public transport investment in Australian history, and it runs directly through Melbourne's southeastern growth corridor [8].

Tasmania's infrastructure investment is a stadium. Victoria's is hospitals, rail, and orbital transit.

A stadium is a placebo. It makes people feel good. A hospital is a catalyst. It creates permanent jobs, attracts families, and generates sustained housing demand within a defined radius. That's the difference between infrastructure that generates headlines and infrastructure that generates equity.

> "I always ask the same question: does this infrastructure project create permanent jobs or temporary ones? A stadium is two years of construction followed by 30 casual bartender shifts per event night. A hospital is 1,500 permanent positions paying $70K to $150K, every single one needing a house within 30 minutes of the campus."

## The oversupply nobody talks about

Tasmania's population is approximately 541,000. The state's building pipeline as of mid-2021 included roughly 8,000 residential dwelling approvals in the preceding 12 months [9]. That's a building rate of approximately 14.8 dwellings per 1,000 residents.

Victoria, with 6.6 million people, approved approximately 62,000 dwellings in the same period — a rate of roughly 9.4 per 1,000 residents [9].

Tasmania is building at 1.6 times the per-capita rate of Victoria. For a state with net population decline projected in several regional local government areas, that's a recipe for localised oversupply.

The oversupply risk is concentrated in two areas: Hobart's northern suburbs (Glenorchy, Moonah, Claremont) where medium-density development has been approved at scale, and Launceston's fringe where land-and-house packages compete directly on price with Hobart's existing housing stock [9].

When supply grows faster than demand in a low-income market, rents stagnate and vacancy rises. Hobart's vacancy rate, which sat below 1% in 2019, has crept up to approximately 2.5% as of early 2022 [10]. That's still technically balanced, but the trend direction is wrong. And in a market where the median rent is $460 per week, even a modest vacancy increase compresses yields quickly.

In Melbourne's Casey and Cardinia corridors, vacancy rates sit at 1.2-1.5% despite ongoing population growth of 3%+ per year [10]. The demand pipeline overwhelms the building pipeline. New supply gets absorbed as fast as it's completed. That's the difference between a market growing into its supply and a market where supply is outrunning demand.

I ran this scenario for a client who was deciding between a $420,000 house in Launceston and a $650,000 house in Hampton Park. The Launceston property rented for $340 per week — a 4.2% yield that looks attractive on paper. But the vacancy in that corridor had crept to 3.1%, and the median rent hadn't moved in 18 months. The Hampton Park house rented for $450 per week with a proven trajectory of 5-8% annual rent increases, and adding a granny flat for $110,000 would push combined rent to $820 per week. Over a five-year hold, the Melbourne property generates approximately $46,000 more in cumulative rent and $120,000 more in capital growth. The Launceston "bargain" was the more expensive choice.

## Victoria's 3-year GDP increment vs Tasmania's century

I'll give you one number that summarises everything.

Victoria's Gross State Product (GSP) in 2020-21 was approximately $470 billion [11]. Tasmania's was approximately $33 billion. Victoria's GSP grew by roughly $40 billion over the three years from 2018 to 2021.

Victoria's three-year GDP increment — the amount of additional economic output generated in just three years — exceeds Tasmania's entire GDP. The whole state. Every industry, every worker, every business in Tasmania, combined, produces less economic output per year than Victoria adds in one year of growth.

This isn't to diminish Tasmania's economy. It's to put scale in context. Economic output drives employment. Employment drives population. Population drives housing demand. Housing demand drives prices.

When you invest in Melbourne's growth corridors, you're riding the economic engine of Australia's second-largest state economy. When you invest in Tasmania, you're betting on a state economy smaller than the City of Melbourne's local government area.

The question every investor should ask is: where do I want my $500,000? In a market backed by a $470 billion economy adding $15 billion a year, with 1.4 million people arriving over the next decade? Or in a market backed by a $33 billion economy, with 30,000 people arriving over the same period — many of whom will leave once they get their visa?

The answer is obvious. But people keep buying in Hobart because the entry price is low and Domain runs cheerful articles. Entry price is not the same as value.

## The verdict: Tasmania will grow, but it won't make you rich

I want to be fair. Tasmania isn't a disaster. Hobart is a beautiful city. The lifestyle is genuine. Property prices won't collapse. They'll grow — slowly, probably 3-5% per year, in line with a low-growth, low-income economy.

But 3-5% annual growth on a $640,000 property is $19,200-$32,000 per year. On a Melbourne $650,000 property in Casey or Cardinia — where 10-year compound growth has averaged 7-8% — that's $45,500-$52,000 per year. Over a 10-year hold, the difference is $260,000 to $300,000 in equity.

Add a granny flat in Melbourne and you're earning $870-$950 per week in rent while collecting 7%+ capital growth on the land. Tasmania can't match either number. The rent ceiling is too low. The population pipeline is too thin. The infrastructure is stadiums, not hospitals.

Will Tasmania double in 7 years? No. The maths doesn't support it. You'd need 10.4% annual compound growth sustained for seven years. Tasmania hasn't sustained that growth rate for even three consecutive years outside the 2017-2020 anomaly.

Will Melbourne's southeast double in 7 years? At 7.5% compound growth, yes. It's done it before — multiple times across multiple cycles. And the drivers are structural: population growth of 3%+ per year, $35 billion in committed infrastructure, and a $470 billion state economy that generates sustained employment.

Buy where the economy is. Buy where the people are going. Buy where the infrastructure creates permanent jobs, not temporary spectacles.

Tasmania is a holiday destination. Melbourne's southeast is a wealth-building machine. Don't confuse the two.

## References

1. [Real Estate Institute of Tasmania (REIT), 'Quarterly Median House Prices — Greater Hobart', Q1 2022.](https://reit.com.au/tasmanian-property-market/)
2. [Australian Bureau of Statistics, 'Population Projections — Tasmania', 2021. Projected growth from 541K to 570-590K by 2031.](https://www.abs.gov.au/statistics/people/population/population-projections-australia)
3. [Department of Home Affairs, 'State and Territory Nominated Visa Programs — Tasmania DAMA', 2021. Points advantages for settlement in Tasmania, outmigration rates of PR holders.](https://immi.homeaffairs.gov.au/visas/working-in-australia/regional-migration)
4. [Australian Bureau of Statistics, '2021 Census QuickStats — Greater Hobart / Greater Melbourne'. Median household income comparisons.](https://www.abs.gov.au/census/find-census-data/quickstats/2021)
5. [PremiumRea construction division. Melbourne granny flat addition: $110K build, $370-$500/wk rent. Combined house + granny flat rent: $870-$950/wk.](#)
6. [Tasmanian Government, 'Macquarie Point Stadium Precinct — Project Overview', 2021. $715M proposed multi-purpose stadium.](https://www.tas.gov.au/macquariepoint)
7. [Victorian Government, 'Frankston Hospital Redevelopment', 2021. $1.1B investment, 120 additional beds, 1,500+ permanent staff.](https://www.peninsulahealth.org.au/frankston-hospital-redevelopment/)
8. [Victorian Government, 'Big Build — Cranbourne Line Upgrade and Suburban Rail Loop', 2022. $2.8B line upgrade, $30B+ SRL.](https://bigbuild.vic.gov.au/)
9. [Australian Bureau of Statistics, 'Building Approvals — State by Dwelling Type', 2021. Tasmania: ~8,000 approvals (14.8/1,000 pop). Victoria: ~62,000 (9.4/1,000 pop).](https://www.abs.gov.au/statistics/industry/building-and-construction/building-approvals-australia)
10. [SQM Research, 'Residential Vacancy Rates — Hobart and Melbourne', 2022. Hobart ~2.5%, Casey/Cardinia 1.2-1.5%.](https://sqmresearch.com.au/graph_vacancy.php)
11. [Australian Bureau of Statistics, 'Australian National Accounts: State Accounts', 2020-21. Victoria GSP $470B, Tasmania GSP $33B.](https://www.abs.gov.au/statistics/economy/national-accounts/australian-national-accounts-state-accounts)

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Source: https://premiumrea.com.au/blog/tasmania-property-investment-warning
Publisher: PremiumRea (Optima Real Estate) — Melbourne buyers agent