It follows a 10 to 15 per cent year-on-year increase in the volume of property sales over the past five years.

Mr Michieletto said he remained confident demand for housing would increase, though it could take at least two years or more. 

He attributed the drop in the median sale price to the collapse of the proposed Bell Bay Pulp Mill, which had caused a surge in interstate investors from about 2007. 

Tasmanian timber company Gunns Limited had been planning to build the Mill in the Tamar Valley, but was placed in voluntary administration in 2012, and the project never found an investor. 

“In real estate, a lot of people got burned, a lot of investors from the mainland bought property here, they bought it at peak prices.

“When they announced the Pulp Mill, the prices rose by about probably 20 per cent. These investors they paid that sort of money for properties here,” Mr Michieletto said.

Mr Michieletto said the median sale price in George Town was $151,000, and it had dropped over the last two years by $20,000. 

Australian Bureau of Statistics data released in June found that the median sale price of property in George Town was $185,000 in 2013.

“Most people thought that the Pulp Mill was the saviour to the town,” Mr Michieletto said. 

According to the REIT, Tasmania’s median house price doubles that of George Town at $311,925.

“In five years it's (George Town sale price) probably dropped a lot more than that. Gunns went down as the economy went down, and real estate prices started to plummet,” he said. 

“Five years later we’re selling those sort of properties and some of them for up to 30 per cent less than they paid for them.”

George Town mayor Bridget Archer said she’d noted an increase in new residents in George Town over the past 12 months.

“There’s a lot of properties that sat for sale for a really long time that are suddenly starting to move quite quickly, anecdotally I would say I think there’s an optimism,” she said.