Canberra house prices fall, bucking national upward trend

Canberra house prices are in decline, bucking a national trend that has seen prices rise in nearly all capital cities.

According to the latest Domain House Price Report released on Wednesday, Canberra’s median house price fell over the December quarter, hitting a new price trough of $1.024 million and reversing all growth recorded in the previous quarter.

“Canberra is really [an] interesting city at the moment because it is now the furthest away from its price peak compared to the other capitals, and it’s now the only city that hasn’t really moved into a recovery,” said Domain chief of research and economics Dr Nicola Powell.

The median now sits 12.9 per cent below its June 2022 peak, down by about $151,000.

While most other cities faced an undersupply of stock, Canberra recorded supply above the five-year average, with stock 22 per cent higher than the same period last year.

“That in itself eases competition between buyers and they don’t have that fear of missing out,” Powell says. “Buyers know there’s choice.”

Josh Morrissey from Hive Property said he noticed fatigue, uncertainty and a lack of confidence on all sides of the market towards the end of 2023.

While this meant some vendors held off listing, he said turnkey properties performed strongly.

“Buyer sentiment was basically to get as much as you can, for as little as you can,” he said. “Everyone was trying to buy something with as little work to do because nobody was sure about the [interest] rates.

“There wasn’t a lot of that stock around, because anybody with a turnkey product trying to sell was waiting for the market to rebound so they didn’t undersell a good asset.

“So you almost had this manufactured low supply of turnkey properties, and they just flew out the door.”

While house prices are down, Canberra unit prices recorded some of the strongest growth in the country.

At the end of 2023, they moved through their fourth consecutive quarter of growth, resulting in a new peak of $625,597 – about $13,000 above the previous peak reached in the June 2022 quarter.

Powell said this may come down to affordability.

“For people looking to break into the market, houses are out of bounds because Canberra’s average house price is still above $1 million, and unaffordable for many,” she says. “So that steers demand towards units.”

Luke Lindley from AM Property Agency said he had noticed a shift in the buyer demographic of the unit market.

“Investor sentiment tended to be that they’d get more leaving their money in the bank than purchasing a property, given the interest rates,” he said. “So investors weren’t in the market as much, but the heartfelt first-home buyers definitely were.”

During the December quarter, Lindley said buyers were spending more time doing their due diligence, and more homes than usual sold via offers.

“The sellers we were dealing with had very good results, but how we got to that destination was often different to 12 or 18 months ago when we would always take it to auction and know we would get the results,” he said.