Canberra’s home values are continuing their trajectory into record territory, with strong demand for houses across the city driving the median house value to $704,865.
According to the latest CoreLogic data for February, the overall median home value (houses and units) for the ACT is $631,862, up 0.8 per cent for the month, 1.1 per cent for the quarter and 4 per cent for the year.
Houses are up 0.8 per cent for the month, 1.2 per cent for the quarter and 5 per cent for the year, while units at $445,354 are up 0.5 per cent for the month, 1.1 per cent for the quarter and 0.9 per cent for the year.
This compares to a national surge in values of 1.1 per cent, with values across five of Australia’s eight capital cities reaching a record high, with the gains continuing to be strongest in Sydney (+1.7 per cent) and Melbourne (+1.2 per cent).
Peter Blackshaw agent Mario Sanfrancesco said there had been more buyers in the market and increased visitors to open homes, with keen competition, particularly for freestanding homes.
But he said not a lot were coming on to the market, with listings still low in the inner south and parts of Woden for houses, larger live-in owner apartments and townhouses.
According to Mr Sanfrancesco, an easing in lending requirements for mortgage applicants and years of low interest rates, including the Reserve Bank yesterday (3 March) cutting interest rates by 25 basis points to a record low 0.50 per cent due to coronavirus, could see more renters taking the plunge.
“I imagine there are people renting right now and their current rent could well cover a loan if they could come up with a deposit,” he said. “Further rate cuts will certainly be another stimulus that will add activity.”
And with the coronavirus ructions in the stock market, there could be capital flight back to property for investors, especially in the units market where rents remain strong.
“Some investors will say, ‘why not buy a property? We know it’s going to rent, rent is strong, rates are low'”, Mr Sanfrancesco said.
He said anything under $1 million was sought after, but he had also been involved in recent sales of $3.5 million and another above $4 million.
CoreLogic says their latest results continue the recovery trend that has been running since June last year.
According to CoreLogic head of research Tim Lawless, the national index is likely to reach a new nominal high over the next two months.
Melbourne has joined Canberra, Brisbane, Hobart and Adelaide with housing values also tracking at record highs.
Demand continues to be strong at the higher end of the market, partly due to lenders favouring quality borrowers – those with high deposits and low debt.
But Mr Lawless says the “primary factors driving this rebound remain in place and include an extremely low cost of debt and improved borrowing capacity”.
The impact of the coronavirus crisis is likely to be double-edged, with interest rates set to be cut even lower as the virus eats into an already flagging economy, but with consumer sentiment also taking a dive.
“A more significant downturn in consumer sentiment related to the coronavirus outbreak could become a determining factor that impacts the market over coming months,” Mr Lawless says.
“While housing demand is now relatively insulated from a downturn in foreign buyers, the economic impact on key export sectors such as education, tourism and commodities is likely to result in weaker economic conditions and lower consumer sentiment.
“Consumer sentiment readings are already low, and a further deterioration could see housing market activity start to slow.”