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.
"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."
There are pockets of the city that have been comparatively immune to the decline.
Brighton median values decreased just 1.1 per cent this year, to $527,512, and Hobart's north-eastern suburbs dropped just 1.2 per cent.
Ms Welling said she had recently seen an increase in the number of properties coming onto the market, partly because sellers and agents no longer think waiting will potentially yield a higher sale price.
"I think we're all taking a huge breath that this year will be something that resembles pre-COVID, where the buyer knows what they should be offering, the vendors have an idea of what they'll get for their homes, and the agents go in very well educated and it's not as if we're walking into a cave anymore", she said.
"We can say with confidence 'this is what we think your property is worth in the marketplace' and the buying market won't pick that up and run with it and drive the price up by $150,000."
Regional prices buck the trend
There are plenty of places in Tasmania that saw median house values increase in 2022.
According to CoreLogic, the median value of a dwelling in the Central Highlands went up 9.6 per cent to $451,177 — the best-performing region in the state.
The north-east saw an increase of 8.5 per cent, while properties in Burnie-Ulverstone went up 6.8 per cent to $451,767.
Launceston has so far been spared the worst of the decline, dropping 2.8 per cent in 2022.
However, local real estate agent Tim Saunders believes the full effect of the downturn may still be making its way north.
"There's always a lag between Hobart and Launceston, so we will see a bit of a correction but at the moment we're still suffering from very short supply," he said.
Mr Saunders puts that lack of supply to a preference for renovations over the past couple of years, and to changing demographics.
"It is a matter of people staying put, because of building costs.
"Also, if you look at the housing density, it used to be mum, dad, and three kids. Now it's mum, dad, and maybe one kid.
"Suddenly … you've got 40 per cent less occupancy in those homes. We've got the same number of people, but we've got less places to house them."
