Andrew Wilson: Canberra's housing demand continues to grow ahead of supply

The Canberra housing market has continued its resurgence this year with rising demand continuing to push ahead of supply.

Auction volumes and clearance rates have strengthened compared to a year ago, asking prices have increased, new listings are on the rise, average days on market have fallen and the private sale discount rate remains low.

Latest ABS data for February has also recorded a general rise in residential lending activity to start the year for the ACT.

The total value of residential lending excluding refinancing approved over the first two months of 2017 has soared by 19.2 per cent to $815.7 million compared to the same period last year.

Investors have provided the most significant contribution to the sharp increase in home lending over the past year, with the value of loans approved to this group up by 43.3 per cent to $341.9 million.

Investor loan activity in the ACT over February accounted for 41.5 per cent of all residential lending, which was well ahead of the 32.7 per cent loan market share recorded over February 2016.

Although investor activity has surged over the past year, ACT first home buyer numbers crashed over February. Just 94 loans were approved for first home buyers over the month, which was well below the 157 approved over January and also significantly fewer than the 142 recorded over February last year.

Not surprisingly, the total market share of first home buyer lending fell to just 6.8 per cent over February, the lowest recorded by the local market since March 2004.

The ACT result was the second lowest of all the states and territories over the month with only NSW lower with a lending market share of just 4.3 per cent.

The average loan approved for a first home buyer in the ACT over February was $290,600, which was an increase of 1.4 per cent over January’s result but 1.3 per cent lower than the $294,300 recorded over February 2016.

Rising investor activity and falling first home buyers in the ACT reflects the current strident national policy debate clearly struggling for solutions to correct this imbalance. The clear risks are ad hoc policies that cause more problems and disruptions than they solve.

Dr Andrew Wilson is Domain Group chief economist Twitter@DocAndrewWilson Join on LinkedIn and Facebook at MyHousingMarket.