Unit sales surge in Canberra despite January housing activity dip

While January is a notoriously slow month for housing turnover, a slip in activity has not deterred the trends that earmarked 2016. House prices have continued to steam ahead by 0.68 per cent from December to a median sale price of $635,000 for the Canberra and Greater Queanbeyan region, recording a 3.53 per cent growth across the year.

A lack of house stock is the trigger putting pressure on prices. January is no exception, with 364 new vendors listing homes for sale over January, dropping 5.7 per cent compared to January the year prior. This is only the equivalent of 22 fewer homes listed for sale but it is the month-on-month trend that has led to dwindling housing stock.

A drop in buyer numbers, which is expected throughout the holiday season, has counterbalanced the fall in stock. One key indictor that gives an insight to the level of demand is the number of houses that sold by auction. The figure continues to grow – more homes sold under the hammer compared to the year prior. Auctions are a true insight into market sentiment and more importantly buyer behaviour and demand. As auctions become a popular and successful method of sale it illustrates the greater degree of competition in the market helping to drive prices north.

Housing activity may have slid but unit sales (including townhouses and apartments) jumped by 20.2 per cent annually to 155 sold over January. Turnover has been growing in recent months as some buyers are priced out of the escalating housing market. Recent activity could suggest buyers relocating to Canberra are making the most of low interest rates, the significantly lower entry price compared to Sydney and Melbourne and falling unit prices rather than leasing a home. As rental prices rise purchasing will become a more attractive option for certain buyers.

Unit prices tumbled by 0.97 per cent across the year to $372,000 over the January quarter. Prices did rise by 0.21 per cent from December. Townhouse prices improved 4.31 per cent across the year to $440,000 over the January quarter – the stand out performer.

It has been two months since the Reserve Bank of Australia’s last board meeting. The official cash interest rate decision on Tuesday is likely to set the tone for the year ahead.

Nicola Powell is a property expert for Allhomes. Twitter: @DocNicolaPowell