Even where the population isn't booming, houses are in short supply

Tasmania's population growth might be waning, but the small state still has a housing problem.

Tasmania is predicted to be the first state in Australia to enter natural decline by 2028-29, where deaths outnumber births.

The island's population growth was a measly 0.5 per cent in the year to December 2025, the lowest in the country.

Tasmania's Treasury has suggested lower population growth could improve housing affordability compared with other capital cities, which could, in turn, attract more people to the state.

But that may take some time.

The state went through a higher-than-usual lift in population between 2016 and 2021, before it levelled off.

And that influx is still being felt in the housing market.

But, in theory at least, Tasmania should have enough houses.

Its population was 579,100 last December, and assuming the country-wide average of 2.5 people per household, the state would need 231,640 homes for everyone.

Tasmania already has 268,900 homes.

However, that does not take into consideration other factors, such as the number of homes sitting vacant.

Nor does it account for the 4,719 homes which are used for short-stay accommodation.

There are also family holiday shacks.

And there is a trend for households to be smaller than 2.5 people.

UTAS senior lecturer in economics Maria Yanotti said the average number of bedrooms in a home in Tasmania was three to four.

"People want smaller houses, people are more likely to live by themselves or with a small family,"

she said.

"So the existing stock doesn't really match the existing demands."

There are other signs Tasmania's housing supply is stretched.

The rental vacancy rate in May this year was 0.6 per cent in Hobart, 0.7 per cent in Burnie and 0.8 per cent in Launceston, according to SQM research.

"There is an acute shortfall of housing," said Tim Reardon, chief economist for the Housing Industry Association (HIA).

"A healthy housing market has 3 to 5 per cent rental vacancies."

Living in a backyard shed and later a car

Another sign that the Tasmanian housing market is expensive and stretched is the 5,507 households on the waitlist for public housing.

The average wait for priority applicants is 89 weeks or close to two years.

Em Simic has been waiting for public housing for 18 months.

As a victim of family violence, she is on the rapid rehousing list.

"It's very hard to remain hopeful," she said.

Last winter she was living in a backyard shed with no running water.

"It was pretty grim,"

she said.

After that, she was living in her car with her two dogs.

"It was very hard to normalise covering up the windows at night and rolling out the bedding and cuddling up with my dogs."

Now, Ms Simic is living at a private women's refuge which is warm, safe and secure.

But the amount she pays to live there is more than half her Jobseeker payment.

"Day-to-day living is very sparse. I'm very frugal, I go to community pantries that offer groceries at lower prices, go to community centres that provide free food," she said.

"I eat a lot of toast, an awful lot of toast and toasted sandwiches, because bread is free."

Ms Simic is keen to retrain in community services and re-enter the workforce.

But she said she could not do that without first having a stable base.

"People who are waiting for housing are people, are humans, housing is a basic human right."

On census night in 2021, 2,350 people in Tasmania said they were experiencing homelessness — an increase of 44.8 per cent from 2016.

Affordability

Like the rest of the country, rising house prices in Tasmania has led to reduced affordability.

According to the state treasury, in the 2016 December quarter 23.2 per cent of the family income was required to pay a mortgage.

In the same period in 2025 it was 41.3 per cent, and nationally it was 49.2 per cent.

It reflects a rise in median house values.

And while growth has slowed, in the past year alone Hobart home values have risen by 9.3 per cent to reach a median value of $752,760.

The proportion of family income to meet median rents in Tasmania have risen from 24.9 per cent in 2016 to 26.6 per cent in 2025.

The supply solution

Improving housing supply to address affordability has become the aim of all tiers of government.

The federal government has announced plans to build 1.2 million new homes by 2029.

The Tasmanian government promised 10,000 new social and affordable homes by 2032.

By April this year, it had delivered 4,854 homes, but that figure includes crisis units and residential land.

In total, 2,207 social houses have been built.

Tasmania's premier also recently announced the state government would underwrite the construction of modular homes, to reduce costs for would-be buyers and give lenders confidence.

The HIA said while modular homes were part of the solution, it would also like to see a reduction in the cost of residential land.

"We've seen the price of land rise two or three times faster than the cost of labour or building materials over the past 20 years," said Mr Reardon.

He said state governments in particular need to help with the cost of building infrastructure to bring down the cost of new subdivisions.

"It's a very unsexy topic, but it's about pumping sewage around,"

he said.

The Tasmanian Minister for Housing, Kerry Vincent, appears open to the role of the government in delivering infrastructure to build more homes.

"We recognise that paving the way for future housing growth through provision of enabling infrastructure is key to tackling housing affordability, diversity and availability head on," he said.

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