Canberra house and unit prices down, according to new report

Canberra’s residential market wasn’t immune to a quarterly price slump that has affected most capital cities, despite a year of solid growth, a new report has found.

House prices in the nation’s capital fell over the March quarter, following five consecutive quarters of growth, according to the latest Domain House Price Report, which was released on Thursday.

Canberra’s median house price dropped by 1.4 per cent to $638,696 over the quarter, however it increased by 4.8 per cent during the past 12 months.

Domain chief economist Andrew Wilson said it could indicate the market is stabilising after a boom period.

“It’s a consolidation of what’s been a good year for the Canberra market,” Dr Wilson said.

“The national capital city trend has been for all markets – except for Melbourne and Hobart – to fall, so there’s a bit of consistency there in terms of what’s happening in our housing market.”

The national median house price was $719,024, which represented a 0.5 per cent drop over the March quarter and an annual increase of 6.2 per cent.

It’s the first time the national median price has fallen over consecutive quarters since 2011, which reflects the declining property values in Sydney, Dr Wilson said.

“The outlook for house prices remains subdued with capital city growth, likely to continue to track at best just above the inflation rate for the remainder of 2016,” Dr Wilson said.

“The prospect of weaker house price growth, however, will be welcomed by prospective first home buyers still struggling to get into the market.”

National unit prices also fell over the quarter. Each capital city, with the exception of Adelaide, which remained steady, recorded a dip.

Canberra’s quarterly drop of 2.8 per cent was attributed to an oversupply of apartments and the city recorded an annual decrease of 4.7 per cent.

Dr Wilson said while the unit rental market is tightening with rents rising and vacancies falling there was downward pressure on prices.

“That may come from the mix of units coming on the market,” Dr Wilson said.

“Maybe there’s more one-bedroom smaller units as opposed to the previous periods of larger units being sold.

“New approvals have certainly trended back in the Canberra market and this might be a sign of why.”

The March quarter’s dip hasn’t impacted on Canberra’s property experts’ confidence in the local market, according to a survey released on Thursday by the Property Council of Australia.

The ANZ/Property Council Survey showed that there was an increase in business confidence among property owners, developers, agents, managers and consultants.

The ACT recorded a 19-point increase in business sentiment to 138 out of a possible 160 on the survey’s “confidence index”. The results reflect the 12 months preceding June 2016.

“The overall results for the ACT are positive, with residential, office, retirement living, and hotel/tourism capital growth expectations increasing from the March 2016 quarter,” ACT Property Council executive director Merlin Kong said.

“Right now it’s an opportunity for the government to take stock of the gains that it has made and use that as a foundation to further grow our economy.”

Dr Wilson said federal government decisions will also have an effect on market sentiment.

“A lot will depend on what comes out of the budget and of course we are in this period of a lengthy election campaign and that tends to affect investor and consumer confidence,” Dr Wilson said.

“That’s something that will have buyers and sellers looking sideways over the next couple of months in the Canberra market.”

Dr Wilson said he doesn’t expect much price growth in Canberra during 2016.

“If there is any growth on a quarter-by-quarter basis it will be about 1 per cent and would track around the inflation rate,” Dr Wilson said.