3 April 2023

Canberra house prices still falling but this one was a record $6.6 million result

| Ian Bushnell
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Top seller: 4 Moresby Street in Red Hill, sold by Geocon founder and managing director Nick and Sonya Georgalis, sold for $6,660,000. Photo: Zango/Luton.

Canberra house prices continued to slip in March, but more affordable units and townhouses defied the falling trend driven by interest rate rises to edge up ever so slightly.

According to CoreLogic’s Home Value Index, the Canberra market continued to lose steam, with prices down 0.5 per cent in February, -2 per cent for the quarter and -8.1 per cent for the year.

The overall median price was $828,175.

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House prices fell 7 per cent, down 2.4 per cent for the quarter and 9.8 per cent for the year, with a median of just under $945,000.

Buyers looking for value and limited in their budgets continued to turn their attention to units and townhouses, which rose just 0.1 per cent, stopping the run of price falls since the Reserve Bank declared war on inflation.

The median was just under $600,000 at $596,000.

Auction numbers and clearance rates remained low, reflecting a lack of stock and vendors not achieving the expected results.

Some sellers could also be sitting on the sidelines waiting to see what happens with interest rates and the market.

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Last week, 121 properties went to auction for a clearance rate of 55.6 per cent.

The top sale, however, confirmed again that buyers are willing to part with significant amounts of money at the high end of the market.

Luton Manuka sold the stately home and estate of Geocon founder and managing director Nick Georgalis and Sonya Georgalis at 4 Moresby Street in dress circle Red Hill for an under-the-hammer record of $6,660,000.

The Georgalises made more than $2 million on the deal after buying the property for $4.7 million in 2017.

Described as a dignified residence rooted in Canberra history dating back to 1927, the four-bedroom, three-bathroom property with a pool sits on a huge 3400 square metre block.

The bigger capitals led a reversal of the falling trend overall, with the national Home Value Index (HVI) posting the first month-on-month rise since April 2022, up 0.6 per cent, particularly Sydney, with a 1.4 per cent gain.

CoreLogic’s research director Tim Lawless put the rise down to a combination of low advertised stock levels, extremely tight rental conditions and additional demand from overseas migration.

Tomorrow’s interest rate decision will be pivotal in where the market goes next. A pause, as some expect, could contribute to a continued recovery, although there are still rate rises to flow through the system.

But another hike would be a blow to already dented consumer sentiment and borrowing capacity and mean further price declines.

The big pick-up in migration appears to be the key factor, particularly in Sydney and Melbourne, where newcomers may bypass the tight rental market and go straight to buying a property.

A new report out today says the migration-led population bounceback after COVID is combining with supply chain problems, labour shortages and interest rate rises to form a perfect storm for the housing sector.

The National Housing Finance and Investment Corporation’s State of the Nation’s Housing 2022-23 report paints a grim picture, forecasting shortfalls in dwellings required and affordability worsening.

NHFIC CEO Nathan Dal Bon said the rapid return of overseas migration, together with a supply pipeline constrained by decade-high construction costs and significant increases in interest rates, was exacerbating an already tight rental market.

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“NHFIC analysis shows housing affordability and supply are likely to remain challenging for some time, underscoring the need for a holistic approach to mitigate the housing pressures Australians are facing,” Mr Bon said.

NHFIC expects around 148,500 new dwellings to be delivered in 2022-23 before net new construction falls to 127,500 in 2024-25 and supply recovers in 2025-26.

Over the five years to 2027, Australia is expected to be short 106,300 dwellings and 79,300 dwellings over the decade to 2033.

Not helping the situation is the growth of lone-person households, tipped to be the fastest-growing household type across the country within five years.

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