‘It’s unsustainable’: Canberra’s median house price reaches record $1.178 million

Canberra’s house prices soared by almost $1300 each day in the three months to December, setting a new record high for the city’s median house price which now sits at $1.178 million, new research shows.

The Domain House Price Report for the December quarter, released on Thursday, showed the capital’s median house price increased by 11.3 per cent over the quarter to $1,178,364, up 36.6 per cent year-on-year. This was the steepest quarterly and annual growth of all capital cities.

Canberra also climbed its way to become the second most expensive city in Australia in which to buy a house, behind Sydney where the median is $1,601,467; and just ahead of Melbourne at $1,101,612.

“House price growth gained momentum over the December quarter as buyer and seller activity rebounded post lockdown,” Domain chief of research and economics Nicola Powell said.

“Renewed seller confidence buoyed the volume of newly advertised homes for sale… as well as that end of year period — it gave buyers a sense of urgency to get in before the new year and sellers and buyers harnessed that momentum.”

This saw a record number of properties go under the hammer in the December quarter, increasing by 76 per cent higher than the five-year average at roughly 1800.

And despite the global pandemic, the capital has been a “standout performer”, Dr Powell said.

“Since the pandemic began (March 2020), house prices have risen 52 per cent, the highest rate of growth recorded across the capital cities,” she said. 

“House prices have grown over three times faster than units over the past year, a divergence that has created a record price gap with houses now more than double the price of a unit.”

The great Australian dream of owning a property seemed near impossible for first-home buyers James Keeley and Ella Webster.

“To be frank, it was long, painful and arduous,” Mr Keeley said.

After saving for a house deposit for two years, the couple started their property hunt in April last year and only recently purchased a four-bedroom house in the Belconnen region. 

“We’ve gone to a handful of auctions and registered at five of them and were outbid straight away,” Ms Webster said.

“Basically, we were hoping that people didn’t have as much money as us but we were very naive to think that because of course, everyone else had a bit of money to spend too,” Mr Keeley said.

“Two years ago, we would’ve easily gotten a property within our budget but we were getting outbid with the opening bid which was always frustrating.”

The couple initially wanted a home with a bath, a gas oven and open plan living and dining areas but the must-have features of their home had to be revised with each passing day, they said.

“As each month passed us by, slowly and surely, all the luxuries that we wanted slipped away… [but] thankfully, the stars aligned for us one day and we were able to find something that had some of our wants,” Ms Webster added.

A sentiment often echoed throughout the property industry, particularly in Canberra, was that rising house prices was fuelled by the low stock and high buyer demand. 

Steve Lowe of Agent Team Canberra said while that rang true, “there’s definitely been more heightened buyer activity that has ultimately dwindled that overall supply”.

“But what we saw towards the last 8-12 weeks of the year was stock levels increased and gave buyers a bit more to choose from,” he said.

“We saw the number of bidders at auction fall and in some cases, we had to pass a property in but in saying that, it always sold days later at a price the sellers were happy with.”

Despite this, the competitiveness in the market and the offers from other buyers put Mr Keeley and Ms Webster at wits’ end. 

“Towards the end of our property hunting, we were really about to give up and that’s when we started to look at properties in Perth, where my family is from, because it really felt impossible to get our foot in the door,” Ms Webster said.

“We even started to look at apartments in the Inner North as well but couldn’t validate spending so much on something that wasn’t free-standing.”

According to the data, the median unit price in Canberra declined over the quarter by 1.6 per cent to $555,644, up 9.7 per cent year-on-year.

“Although unit prices did dip marginally over the quarter, they are close to a new record high. In fact, Canberra units have risen 19.5 per cent since the pandemic began, the third-highest rate of price growth across the cities, behind Hobart and Darwin,” Dr Powell said.

Mr Lowe said that unit prices were comparably “more affordable than free-standing houses” and expects the demand for units to increase this year.

“But I don’t think we’ll see any further growth in the housing market. In many ways, it makes sense that Canberra has seen such growth because on average, it has the highest wages in the country but it doesn’t have beach-front properties and other features that could propel the prices even further than it already has,” Mr Lowe said.

“I can’t say I’m surprised by the latest data but moving forward, I think prices will flatline. That kind of growth can’t be repeated, it’s unsustainable.”

Dr Powell echoed Mr Lowe, noting that should property supply continues to rise, “it should support more realistic seller prices and greater buyer choice”.