Nearly a thousand approved homes in central Hobart have never been built, prompting the city council to offer developers a five-year, 100% rates holiday to get projects off the ground.
Council analysis found 907 approved dwellings have stalled, with rising construction costs identified as the main barrier.
The policy, passed on Monday, also refunds application fees for eligible residential projects in the Hobart CBD, North Hobart and the waterfront.
The incentive is worth up to $14,000 per apartment and applies to developments of five or more dwellings.
Speaking outside a former car showroom on Macquarie Street – where about 50 approved apartments were shelved after costs blew out – Lord Mayor Anna Reynolds said the gap between approvals and construction had become a major concern.
“We saw so many really great projects approved, particularly around 2020 to 2023, lots of apartments … but they’re just not being developed,” she said.
“It’s an investment in more construction in our city and more residents in our city.”
Central Hobart’s residential density currently sits at 7.8 dwellings per hectare, well below the regional target of 25.
About 85% of new homes built in Tasmania are detached houses on greenfield land – the highest rate in the country.
Property Council of Australia Tasmania interim chief executive Michael Kerschbaum said the state needed at least 10,000 more homes, with rental vacancy rates sitting at about 1%.
“We’re building about 2,500 homes a year at the moment. That’s nowhere near what we need,” he said.
Kerschbaum said the incentive was modest relative to apartment prices of $600,000 or more, but could be enough to help move some stalled projects forward.
“We hope that, potentially, it’ll make people just go back to the drawing board, revisit the numbers and see maybe if they can make it stack up,” he said.
“Even a slight redesign, cut some costs on the construction side, bring things down a bit, it all helps.”
The policy excludes short-stay visitor accommodation and student housing.
Any dwelling converted to an Airbnb within five years must repay the full incentive.
The council is now hoping TasWater and the state government will add their own contributions to the package.
