NEWNHAM is the suburb to watch, according to the Real Estate Institute of Tasmania's latest sales report.
REIT president Adrian Kelly said the report revealed a "levelling out of property sales" across the state, after a positive start to the year.
House sales in Launceston dropped more than 18 per cent from the last quarter.
"Launceston had a magnificent December quarter, it was extreme, so that's come back and corrected itself in the March quarter," Mr Kelly said.
He said the drop showed that a lot of property was "soaked up and sold" in December, and sales were still up 25 per cent from last year.
"It's still pretty good," Mr Kelly said.
Newnham out- performed most other northern suburbs, with 21 sales for the quarter and a 10 per cent increase over the year.
"The prices haven't quite moved yet but that will happen," Mr Kelly said.
"It's very affordable, but still so close to the city," he said.
Launceston's 213 house sales was the largest of any municipality in the state, and up 40 per cent from March last year.
The report also showed that rentals in the North of the state had the lowest vacancy rate, and rental return was better than Hobart and the North-West.
"Launceston is really holding its own in terms of investment properties," Mr Kelly said.
Mainland interest in Tasmanian properties is increasing, with 17 per cent of sales made by an overseas or mainland buyer looking for a "tree or sea change".
"They are buying down here because they want their piece of paradise," Mr Kelly said.
He said while a view and land was desirable, good services nearby were a must.
Mr Kelly said a drop in first home buyers reinforced REIT's call to keep the First Home Owner's Grant.
"There is plenty of property on the market to suit first home buyers, it's just that they need help to get into the market," he said.