Where have real estate prices dropped the most?
Australia’s most vulnerable region has been revealed. This once thriving real estate market has now recorded the nation’s biggest downturn, data shows.
While the rest of the country is returning to its pandemic highs, a few regions have posted price falls, with one area, in particular, posting the steepest downturn over the September quarter, according to the latest Domain House Price Report.
Surprisingly, it’s not in the big property markets of NSW, Victoria or Queensland.
Instead, it’s a place you’ve likely never heard of if you live outside of Canberra – Molonglo Valley.
The region is Canberra’s newest district and is home to 11,435 people scattered across four suburbs: Wright, Coombs, Denman Prospect and Whitlam. Eventually, the region will be home to 60,000 residents across seven suburbs.
According to the Domain report, Molonglo Valley’s median house price fell by 11.3 per cent over the September quarter – the steepest quarterly decline across the nation – to $1.005 million.
House prices fell 18 per cent over the full year – the second steepest annual decline in Australia.
Steve Lowe of Agent Team Canberra was not surprised by the latest figures and said prices had fallen as a direct result of the rise in interest rates.
“The Reserve Bank (RBA) is trying to balance the see-saw of property prices, and the higher rates go, the lower property prices will go … which is what is happening in Canberra,” Lowe said.
“We’re selling a home [in Molonglo Valley] that was about to launch last November, and at the time, the sellers were knocking back offers of $1.6 million, and now we’re in the market for much less than that.
“Those that tried to sell but didn’t get the price they wanted a few months ago, are now selling and are in a predicament where their house values have come down.”
Since the region was gazetted in 2010, Molonglo Valley has undergone extensive growth, but it really boomed during the COVID period.
By the end of 2020, the region had an $835,000 median house price, down slightly by 9.7 per cent year-on-year.
But the following year, the region recouped its losses, and the median price sailed well past $1 million, hitting a massive $1,272,500, up 51.5 per cent year-on-year. It was one of the strongest-performing regions across the nation at the time.
In 2022, the region continued to reach new heights, albeit at a slower pace, recording a $1.3 million median.
“This is an area with more newer homes and these newer homes have a higher cost to them,” Tim Burke of Luton Properties Weston Creek and Molonglo Valley says.
“For a four-bedroom home in Weston Creek (in another region), you could probably spend around $1 million, but it’s about $1.3 million to $1.5 million in Molonglo Valley. It’s definitely a different price bracket and, of course, fewer buyers at that price.”
Despite this, Lowe says achieving high prices is difficult in this market.
“The thing is, there’s nothing much you can do to improve their value because they’re all fairly modern homes … when you buy in established suburbs, you can always manufacture your own capital growth by doing renovations, extensions and cosmetic improvements but when you’re buying new, there’s not much you can do to improve that, it’s already at its capacity.
“So, now vendors are hit with this new reality, especially if they bought when property prices were high in Molonglo Valley. Buyers have lowered their budgets, and now they’re also spoilt for choice.”
It’s a similar story across Canberra’s remaining seven regions, which all recorded annual declines.
It’s been a wild ride for Canberra real estate over the past few years. As a city, it had its steepest upswing and then the steepest downturn on record.
“The interest rate hikes have definitely been felt across Canberra regions, so we’re seeing less interest, fewer registered parties at auctions … but even if we don’t sell at auction, we’re negotiating sales straight after that as well,” Burke adds.
Now that the RBA has lifted the cash rate by another 25 basis points to 4.35 per cent, Lowe expects property prices to steady despite adjusting prices across sales.
“I’m selling properties now that I sold to people at the peak of COVID. I had a property where the sellers purchased it for $780,000 during the pandemic high and recently, we got an offer of $650,000 which isn’t bad but it also isn’t the norm,” he says.
“Canberra’s market was once considered the safe haven where you buy property, hang onto it for a little while and then it’ll go up by 7 per cent or so, but off the back of the property boom and now interest rate rises, it’s definitely changed.
“But I think most of the losses are being realised. I think this is the bottom of the market here, even in Molonglo Valley.”
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