'It's not a bad decision to be buying at the moment': Hopeful news for Canberra buyers to start the year

Canberra’s property market has reached a rare equilibrium, with house and unit prices holding steady over the December quarter of 2024.

According to the latest Domain House Price Report, the capital’s median house price remained at $1.065 million – the lowest level in a year and 9.2 per cent below its mid-2022 peak.

While most regions recorded minor quarterly changes, Molonglo stood out: house prices in the region increased by 4.2 per cent in the quarter (10.1 per cent annually), while unit prices experienced a 7 per cent quarterly fall (9.2 per cent annual decline).

The steadying market marks the first time in almost six years that Canberra has not seen a quarterly price movement.

“Canberra remains the furthest from its peak and has struggled to enter a sustained recovery over the past three years,” said Dr Nicola Powell, Domain chief of research and economics.

“Despite this, annual gains have gathered slight momentum to rise by 2.4 per cent. However, 2024 showed weakening market conditions, with a 3.8 per cent increase in the first half of the year, followed by a 1.3 per cent fall in the second.”

The unit market in Canberra tells a similar story. Prices remained steady in the December quarter, following a sharp decline in the previous quarter.

Although the steadiness has softened the annual decline, the median unit price of $521,288 is still 7 per cent below its September 2023 peak. This marks the first back-to-back annual decline in Canberra’s unit market in a decade.

Powell attributed the stabilisation to a combination of factors, including affordability challenges, cost-of-living pressures, and limited buyer borrowing capacity.

“The market is finally catching up with the financial strain many buyers are experiencing, reflecting a shift in conditions that can no longer be overlooked,” she said.

“All capital cities are now in decline, stable or experiencing a rapid slowdown in growth – they are all past their peak quarterly and annual growth rates.

“The slowdown is largely due to affordability pressures, with rising prices making it harder for many buyers to keep up. Wages haven’t kept up with home prices, and the ongoing cost-of-living squeeze is only adding to the challenge. Many potential buyers are holding off, hoping for a cash rate cut to boost their borrowing power.”

Canberra agent Sophie Luton of Luton Properties Manuka said this sense of stabilisation had brought noticeable relief to the Canberra market.

“I think people at the moment feel confident to buy because we’ve all accepted what interest rates are,” she said.

“People have settled into what it is, worked out affordability and what they’re comfortable with. And also, I think people know that, at the moment, you’re not overpaying. It’s not a bad decision to be buying at the moment.

“People are still wanting to transact on both sides of the piece, and it’s a stable environment to be transacting in rather than not knowing what’s happening.”

Reflecting on the turbulence of the COVID-19 property boom and its aftermath, Luton noted the challenges of navigating a rapidly changing market, with unprecedented surges in prices creating uncertainty in pricing.

“With things a little bit more stable, it’s a lot easier for vendors, buyers, and us, because we can give a really good indication of pricing,” she said.

With some people still yet to return from holidays, Luton said it had already been an encouraging start to the property market for the year, with their agency alone seeing at least 500 buyers through open homes last weekend.

Despite whispers of a potential interest rate cut in February, she doesn’t expect it to happen just yet or for any initial cuts to make much of a difference to the market for some time.

“On a million-dollar mortgage, if it’s a quarter of a per cent drop, that’s $80 a week,” Luton said. “That’s not groundbreaking savings for people, and that’s not going to change people’s position or their borrowing power.

“I think what some people are hoping it might do is create a flurry again, where people are thinking prices are going to go up. But I think we’re in a cycle, and if you look back at history, these things take 18 months. Interest rate rises happen a lot quicker than the effect of interest rate cuts.”

Luton said an interest rate cut would happen at some point and provide obvious relief to people.

“But in terms of the property market itself, I don’t think it’s going to have a huge impact. I think we’re probably just going to continue to see stabilisation this year.”

Nationally, the Domain House Price Report shows that the property market has continued its upward trajectory. House prices across the combined capital rose for the eighth consecutive quarter and unit prices for the seventh. However, the pace of growth has slowed significantly.

Perth, Adelaide, and Brisbane emerged as standout performers in 2024, with record-high house and unit prices. Perth led the growth in house prices with a 19.5 per cent increase, while its unit market surged by 28.2 per cent.