Steven Burgess has spent the past three decades creating better cities overseas and interstate, consulting on transport and city planning.

Key points: According to the 2016 Census, flats and units make up just 8.6 per cent of dwellings

According to the 2016 Census, flats and units make up just 8.6 per cent of dwellings Experts say the lack of housing in the inner-city is forcing people out to suburbs they don't want to live in

Experts say the lack of housing in the inner-city is forcing people out to suburbs they don't want to live in Hobart's council says it's been receiving and approving more applications for medium-density housing, but developers say heritage restrictions have been a major roadblock

But when he moved back to his hometown of Hobart, the engineer and urban strategist was shocked.

"When I came back, someone had sort of changed all the settings and filled up one of the most beautiful cities in the world with cars," Mr Burgess said.

"People think, 'oh we've got a traffic problem', but it's not a traffic problem, it's a housing problem."

Looking around Hobart for somewhere to live, Mr Burgess could not find what he wanted.

"There's not enough of that inner-urban housing to go around, which is forcing people who don't really want to, to move to the suburbs," he said.

"And once you move to the suburbs, you've got to buy one car, possibly two — every school trip's a car trip, every football trip's a car trip."

Mr Burgess said Hobart was not offering what a growing number of young baby boomers and millennials escaping the mainland want — smaller homes, close to the inner-city action.

Engineer and urban strategist, Steve Burgess, who recently moved back to Hobart, May 2019. ( ABC News )

House prices pushing upwards

So why is Hobart still growing out into the suburbs, instead of up, into medium-density apartments?

At the 2016 Census, more than 90 per cent of dwellings in greater Hobart were separate houses or semi-detached homes, townhouses or terrace houses.

Flats and apartments made up just 8.6 per cent of dwellings, compared with 13 per cent in the rest of Australia.

Tony Collidge from the Real Estate Institute of Tasmania said previously, the business case for medium-density developments had not stacked up.

"We've never really had inner-city apartment living because our median prices were so low that it was fairly difficult for a developer to come in and put up structures of 20 or 30 or 40 units in blocks," Mr Collidge said.

But things have changed.

Greater Hobart's population grew by 1.5 per cent, or 3,300 people, between June 2017 and June 2018.

House prices have pushed upwards, the rental vacancy rate is at a record low and the real estate lobby claims the city is short about 2,000 properties.

"We could put 1,000 apartments in the city tonight and we could sell them within a month," Mr Collidge said.

At the 2016 Census, more than 90 per cent of dwellings in Greater Hobart were separate houses or semi-detached homes, townhouses or terrace houses. ( ABC News: Brian Tegg )

Not all smooth sailing for developers

Developers are taking advantage, and the Hobart City Council has been receiving and approving more applications for medium-rise, medium-density housing.

But developers have complained the large number of heritage-listed properties in Hobart was making it difficult to find appropriate sites.

Tony Collidge says the business case for medium-density development has not stacked up. ( ABC News: Ellen Coulter )

Quinten Villanueva has had his proposal for 34 residential apartments on Hobart's Bathurst Street approved but said there was a disconnect between the planning scheme and what members of council wanted for their city.

"I don't believe that the wants of the community should ever outweigh the needs," Mr Villanueva said.

"I'm not pretending that every development is an instant fix but I believe that any supply, no matter where it is in the market, will restrict some of that imbalance that we're seeing at the moment in both supply and demand."

But Hobart Lord Mayor Anna Reynolds said developers needed encouragement to change the face of the city.

"Many of our developers in Tasmania just want to go with what they know, which is the sub-division in the outskirts and Sorell and these sorts of places," she said.

She said valuable inner-city real estate along Campbell and Argyle Streets that was currently zoned as commercial land could be freed up to house Hobart's growing population.

The Hobart aversion to medium-density development has pushed people out to suburbs they don't want to live in, experts say. ( ABC News: Brian Tegg )

The State Government has begun consulting with councils to create a new planning zone to encourage four to five-storey apartment blocks in the inner-city and rail corridor.

The consultation process is expected to take a year and will result in new planning rules to make it easier for medium-density, apartment-style developments in areas that have not traditionally been zoned as "residential".

'We really saw the opportunity'

Di Elliffe and Robert Gavin are downsizing. ( ABC News: Ellen Coulter )

Di Elliffe has bought into one of the new inner-city developments already approved — the Commons on Bathurst Street — due for completion next year.

"There haven't actually been many nice, attractive medium-density opportunities in town. And now that some are coming onto the market and starting to be built, people are starting to look and think about it for themselves," Ms Elliffe said.

Dave Martin is with the group developing the Commons in Hobart.

The developers have had success in Melbourne with a similar apartment, based on sustainability and community, and Mr Martin said Tasmania's capital was the logical next step.

"We really saw the opportunity in there, we saw it on its uplift and its population growth and we thought, yeah, let's jump into it."

Dave Martin works with the group developing the Commons in Hobart. ( ABC News: Ellen Coulter )

For Mr Burgess, an inner-city apartment without a carpark would be the dream, but it's something he has had great difficulty finding.

"I looked at three places [when I first moved here] but it was still extremely limited and all of them had car parks which I don't want," he said.

"Small cities are the new black, but young people will often only come to places where they can live without a car where they can be close to stuff, walk and meet their friends.

"There's still a proportion of the market that want a suburban house and we've got that covered.

"But what we don't have covered are those close-knit urban villages where you can walk to the butcher, baker, grocer or candlestick maker all in your small little community."