Interest rate increases are to blame for property sales falling by nearly 20 per cent over the past three months in Tasmania, a real estate body says.
The Real Estate Institute of Tasmania's (REIT) latest quarterly report showed 2,142 properties — including just over 1,500 homes — were sold between July and September, with the median house price falling 2.6 per cent, to $610,000.
The number of land sales also plummeted, falling by 51 per cent.
REIT president Michael Walsh said rising interest rates combined with growing cost of living expenses and slow wage growth were the main causes of the drop.
"The rapid rise in prices over the past 12 months, combined with increasing interest rates — which have impacted the borrowing capacity of many purchasers — has created a climate of uncertainty and apprehension with purchasers in the market," he said.
"We are seeing a controlling transition from seller to buyer occurring."
Acton Park was the state's most expensive suburb in the September quarter, with five properties selling for a median price of $1,411,000.
It beat out the state's traditional front-runner suburbs of West Hobart at $1,250,000 and Sandy Bay at $1,225,000.
Greater Hobart saw one of the biggest drops, with home sales falling by 21.2 per cent and the median sale price decreasing by 4 per cent to $757,775.
But Mr Walsh said it was not all doom and gloom for homeowners.
"Our local market was well positioned to minimise the fallout. We still have a shortage of stock — although levels have improved considerably — and relatively good buyer interest," he said.
"I don't believe we will be seeing prices spiral downward out of control."
First home owners have had to bear the brunt of rising interest rates and surging prices, with REIT's report showing the number of first home buyers dropped by 19 per cent since June, down to 345.
Rental prices also saw the biggest rise in Hobart, increasing by 3.8 per cent or $20, which is $550 per week for a three-bedroom house.
"Rising interest rates, growing cost of living expenses, inflation and slow wage growth are finally starting to bite," the report reads.
Investor participation in sales plummeted by 31.8 per cent, with only 305 sales, half of what was recorded for the same period last year.
Mr Walsh said he was concerned about the drop in investors and what effect it would have on rents and rental availability.
"This highlights the need for the government to not only move expediently with its public housing construction program but to also consider ways to get investors back into our market," he said.
"I remain positive about the direction in which our market is heading. It is now a level playing field with equal opportunity for both buyer and seller to achieve a fair and favourable outcome."