Data from the Real Estate Institute of Tasmania (REIT) shows the rental vacancy rate in Launceston is 3.3 per cent and the cost of an average three-bedroom house is $295 per week.

REIT Launceston spokesman Michael Welsh, from Roberts Launceston, said rental prices had increased in the past few years and most agencies in the area are at a 1.1 per cent or less vacancy rate.

“Working couples seem to be happy to rent if they can get something affordable and if you have willing and able tenants, people who have a budget or a specific need for rooms could be pushed out,” he said.

A Longford families whose house was destroyed by fire in February have been unable to find a suitable property in the area for their needs and are still living out of a motel until they can find something.

REIT president Tony Collidge said changes in the property market in Hobart appeared to be drifting North to affect the Launceston area.

“The situation in Hobart is diabolical at the moment."

He said his agency, which normally has hundreds of rental vacancies, had only six over Christmas.

“For those six we had 900 people on the waiting list,” he said.

An unexpected side effect of the introduction of AirBnB in Tasmania meant that a lot of people who had extra properties were using them as BnBs for tourists rather than renting them out, as they traditionally might have.

“There’s also been enough population growth in the past few years that all the surplus properties for sale have been snapped up,” he said.

He said despite the First Home Builders Grant being in effect, builders could not build enough properties fast enough to meet the demand for rentals.

The issue was a catch-22 as it means more people were in properties but it was hard for those who rent.

Property Council’s Brian Wightman said in order to address the issue the state government should consider lifting the First Home Builders Grant.

The First Home Builders Grant is an initiative that is used to stimulate activity in the building industry and increase housing affordability for first home owners.

The level of the grant at its height in 2014 was $30,000 but it will be reduced to just $10,000 in June.

Mr Wightman said the FHBG made a block of land and building a house affordable to younger people.

“In our experience many couples and individuals entered the housing market who could previously not afford to do so,” he said.