Canberra house prices in recovery mode

After years without growth, Canberra house prices are finally taking tentative steps towards recovery.

According to the Domain House Price report released on Thursday, Canberra house prices rose by almost $9000, marking a 0.8 per cent growth in the June quarter. 

The median Canberra house price is now $1.04 million, almost $132,000 (11.2 per cent) below the mid-2022 peak. 

“While Canberra has struggled to move into an established recovery, we have seen an improvement,” said Domain’s chief of research and economics, Dr Nicola Powell. 

“Canberra houses posted a positive quarterly gain to nudge annual changes back into positive territory for the first time in almost two years.” 

Nationally, median house and unit prices continued to increase in the June quarter, marking the sixth consecutive rise for houses, but the pace of growth has slowed compared to the previous quarters of 2023. 

The national slowdown is even more pronounced for units, which grew at a rate more than four times slower than the previous quarter. 

But it’s a different story in Canberra, where median unit prices outperformed houses after two deep quarters of a decline. According to the report, the median Canberra unit price rose by 1.8 per cent, or just over $10,000. 

“Unit prices are roughly $34,000 or 5.5 per cent below its price peak,” said Powell. “As unit prices rose faster than houses over the quarter, the price gap between property types has marginally narrowed, with houses now 75 per cent more expensive than units – significantly below the 99 per cent peak of March 2022.”

While the growth is a positive sign for Canberra’s housing market, she said it’s still too early to declare a full-blown recovery. 

“Despite the recent growth, Canberra has yet to see a sustained pricing recovery and remains one of the weaker capital cities,” said Powell.

“Canberra house prices are the furthest from their price peak among all the capitals and have only recovered 1/16th of their losses.” 

While the national median growth has slowed, growth rates have accelerated in some cities. House prices in Sydney, Brisbane, Adelaide and Perth are all at record highs. In particular, Perth’s annual gains have accelerated to 23.8 per cent, marking a 17-year high, while Brisbane recorded 16.9 per cent growth, a two-year high.

The overall deceleration in the market is underpinned by a growing choice of homes, which are 7 per cent higher annually across the combined capitals. This is coupled with a 9 per cent increase in new listings, which Powell said is likely indicative of restored vendor confidence that typically follows the cementing of a market recovery and sustained price growth.

However, nationally, stretched affordability is increasing the time it takes to sell in some cities as buyers become more cautious in their search for their ideal property.

“The housing market continues to defy all expectations, growing despite low consumer sentiment, stretched affordability from cost-of-living pressures, and high interest rates,” said Powell.

“Supply remains constrained overall, weighed against a surge in demand from strong population growth and a tight rental market contributing to the market’s buoyancy. The longer the cash rate stays higher and inflation elevated, the odds for a softer price growth remain.”