Canberra homes outperformed the biggest cities over the past decade

If you think Australia’s biggest cities have made home owners the most gains over the past decade, then think again.

Despite Sydney being the most expensive city in which to buy a house – with a median of $1.58 million – Domain data shows the biggest wealth creators are our smaller capitals. 

“Sydney’s market tends to skyrocket, but the interesting twist is that annual profit margins in the smaller cities, such as Perth, Hobart and Canberra, have been more impressive over the past decade,” says Domain’s chief of research and economics, Dr Nicola Powell.

“Canberra’s property story is even more colourful, as your dollars go comparatively further than in a market like Sydney or Melbourne. The city has seen returns fuelled by slow supply, the influx of buyers priced out of other markets, and strong growth periods.”

The nation’s capital managed an average annual return of 5.07 per cent on houses resold over the past decade, while Sydney recorded 4.14 per cent. 

The story was even better for units, with Canberra returning an average of 5.52 per cent and Sydney 4.78 per cent over the same time period.

However, Domain’s latest House Price Report revealed Canberra’s median house price dropped to $1.024 million over the December quarter, down 12.9 per cent from its June 2022 peak.

Powell says the city saw a “phenomenal upswing” during the pandemic and historically, doesn’t experience big swings downwards. 

“The dip in house prices since the 2022 peak has been somewhat unusual,” she says, adding that what these fluctuations show is that home owners are at the mercy of multiple price cycles. “Returns vary across locations and evolve over time. Property really should be viewed as a long-term investment for building wealth and security.”