The rising cost of funds and a lack of stamp duty concessions are hampering new unit construction in Hobart.
Hobart units are currently achieving an average annual growth rate of 11.4 per cent, according to RP Data.
Developer Heath Thompson, who is selling apartments in his new Bathurst St complex, said the market has been performing well, but has ruled out further investment in Hobart.
"As it stands now, we would never do another apartment complex like this in Tasmania," Mr Thompson said.
"In Melbourne there are huge stamp-duty savings if you buy off the plan,” he said.
“You can't get those pre-sales in Hobart, which means you can't get construction finance and you can't start building."
Premier Lara Giddings said Victoria was the only state with stamp-duty concessions for off-the-plan purchases but she said changes to land and payroll tax encouraged potential investors.
Tasmania was "well and truly open for business", she said.
"Overall Tasmania has the lowest taxation severity of any state or territory.”
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