Canberra among best for house price growth

The Canberra housing market continues to provide robust results for local home owners with the latest data revealing nation-leading growth in house prices.

Domain reports that the Canberra median house price surged by 4.3 per cent over the September quarter to a new record high of $723,980. The Canberra growth rate was the highest recorded of all the capitals with the exception of Hobart were the median increased by 4.4 per cent over the quarter.

Canberra house prices have now increased by 10.5 per cent over the past year, which is behind only Melbourne at 13.9 per cent and Hobart at 14.8 per cent for annual growth rates.

Although Canberra and Hobart recorded strong house price growth over the September quarter, other capitals reported subdued results.

Sydney house prices fell sharply by 1.9 per cent, which was its first quarterly decline since December 2015 and only the second reported over the past five years. Despite the fall, Sydney remains the most expensive of all the capitals with a current median house price of $1,167,516.

Melbourne house prices increased by 1.3 per cent over the quarter, but this was significantly lower than the 4.1 per cent recorded over the previous quarter and its lowest result for three years. House prices in Brisbane and Adelaide fell marginally over the September quarter, down by 0.2 per cent and 0.3 per cent respectively. Perth house prices continue to fall and were down by 1.3 per cent over the quarter, which was the third consecutive quarterly decline with local house prices now at their lowest level for five years.

Canberra unit prices also increased over the September quarter, higher by 1.9 per cent to a median of $427,391. Local unit prices remained 0.5 per cent lower than recorded over the September quarter last year.

Low interest rates remain a positive force in the Canberra housing market although, with official rates on hold since August last year, the potential to fuel continuing strong prices growth is diminishing, particularly with the low levels of incomes growth generally in the economy.

Recent initiatives by policymakers to curtail residential investor activity through tighter lending conditions and higher interest rates have however impacted housing market activity over the September quarter – particularly in the Sydney market reflecting its higher proportion of investors. With home prices now generally falling, it is unlikely these policies will be persisted with; particularly give their impact on underperforming markets such as Perth and Brisbane.

Canberra house prices can be expected to continue to increase over the remainder of this year although at a lower rate than recorded over the latest quarter. Rising migration, a solid local economy, an undersupply of housing and heady confidence are key current drivers of the local market.

Although Canberra has recorded strong recent growth in house prices, the median has increased by just 29.4 per cent over the past five years, which is well below Sydney where house prices are up a remarkable 80.3 per cent over the same period.

Andrew Wilson is Domain Group chief economist

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