Canberra unit prices reach a new record median: Domain House Price Report

Unit prices in Canberra have reached a record high, making it the second most expensive city in which to buy a unit, according to a new Domain report.

House prices in the city continue to increase, but the annual rate of growth has eased to an 18-month low. 

The Domain House Price Report, released on Thursday, revealed Canberra unit prices increased by 4.4 per cent over the quarter to a median of $599,735, up 5.6 per cent year-on-year. 

This is the first time since 2012 that Canberra has been the second-most expensive capital city in which to buy a unit. 

Canberra is also the second most expensive Australian city in which to buy a house, with the capital’s median house price increasing by 1.8 per cent over the quarter to $1,154,535, up 14.3 per cent year-on-year. 

Sydney retained its position as the most expensive city in which to buy a unit or house, with prices remaining well ahead of Canberra at $790,983 and $1,552,015, respectively, dropping by 0.6 and 2.7 per cent over the quarter and increasing by 0.4 and 8.3 per cent year-on-year. 

Domain chief of research and economics Dr Nicola Powell said the data revealed Australia’s housing market was losing momentum. 

“What we are seeing is the annual pace of growth has reduced across every single city apart from units in Adelaide,” she said. 

“In Canberra, we have seen clearance rates drop, we are starting to see overall supply increase, and views per listing are starting to move away and track lower than the peak late last year.

“What buyers will be finding now in Canberra is that the market is shifting.” 

The growth and milestone median cost for units in Canberra was due to a number of factors, including the high purchase cost of a house, Powell added. 

“Affordability is one of the main reasons [for unit price growth], as we saw median house prices reach over $1 million in the pandemic,” she said. 

“The value of home loans for owner-occupier first-home buyers hit a record high in May, which also caused an escalation of first-home buyer activity.

“First-home buyers are steered towards the lower end of the market, and that would be units.” 

For first-home buyers Steven Cuzzillo and Elise Garrity, buying an apartment in Narrabundah was an obvious choice.

With house prices continuing to increase, apartments were realistically the only feasible option when Cuzzillo was looking for a place to buy.

“I had a plan for what I was looking for, and viewed only one other apartment before landing on the one I did,” Cuzzillo said. 

The couple purchased the one-bedroom $400,000 off-the-plan apartment the very first day they saw the plans.

“I knew buying a house wasn’t achievable, so I started by looking at other options,” Cuzzillo said. “It was either a two-bedroom apartment in Woden or a one-bedroom in the Inner South, so this narrowed down the areas and complexes. 

“The price of a house was not in the price range, but [at least] this is a great stepping stone into the property market.” 

With rental costs continuing to increase in Canberra, more first-home buyers are entering the market, said Aaron Lewis of Independent Our Team.  

“Units are always a great entry-level option given they are highly affordable in comparison to other options,” he said. 

“Also, more first-home buyers are happy with a one- or two-bedroom apartment and don’t need much more space than that.

“Typically first-home buyers don’t focus on a purchase of a house until they are needing more room because they’re in a new relationship or looking to have children.” 

Lewis said the change in the housing market was a switch from last year’s unusually busy market to a more balanced one, which is another reason why house price growth is slowing. 

“Some properties are taking a little longer to sell, as opposed to the two to three weeks we were seeing last year,” he said. 

“Now properties are taking three to five weeks to sell as buyers need more time to get approvals updated by their banks.

“We are still seeing house prices remain steady with a lot of interest from live-in owners.”