Canberra’s record home values keep rising as low rates excite buyers

Ian Bushnell 3 March 2020 2
Housing affordability

Canberra continues to experience steady growth in home values. Photo: File.

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.”


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2 Responses to Canberra’s record home values keep rising as low rates excite buyers
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Ray Whitehead Ray Whitehead 9:22 am 05 Mar 20

Maybe it is time that we move away from the failure of neoliberalism and start to invest in public housing.
The government and the real estate industry are WRONG in saying that the private sector is more efficient and better at providing affordable housing, The only thing the private sector is efficient in is profit maximization.
Also it is dead wrong to say that all housing is in the same market. It is not!
Public housing tenant and prospective tenants do not have the means or the ability to participate freely in the private market and are often subject to the worst of the private bottom feeders and the parasite agencies that prey along them.
Time has come for the government to start to get into the house building market and build social housing on a massive scale and be judged each year on their ability to be able to house those in need.
If the govt started to build houses itself( not contract it out to private developers) then houses and apartments would be built properly ( something the private sector is seemingly unable to do) and train and employ apprentices across a wide range of trades ( also something the private sector seemingly is unable to do).
In reality the only effect that you will see in the private market is the bottom feeder landlords would find it hard to survive peddling a substandard product, there will be a slight moderation in speculation from the investor class and the less fortunate would have a secure place to grow their families and participate in society.
But the current Neo-Liberal ACT Government would probably choke on their caviar first.

Ray Whitehead Ray Whitehead 9:12 am 05 Mar 20

This article clearly demonstrates the failure of the current ACT governments neoliberal housing policies. The people closest to the chief minister and the ruling party are property developers. Just notice around Canberra everywhere there is a blade of grass or a tree, you have the govt falling over itself to sell it to a developer for an obscene amount of money. Then look at the Govt as a developer. The new Whitlam blocks are smaller than Austpost stamps. Soon everyone will see the houses start to appear crammed in on top of each other. Oh and probably a token park that will fit at least 10 people as long as they stand close. Gough would be disgusted in what they have done in his name.
We need to start to have an honest debate as to what we want for our city into the future. Do we want the profit driven future slums that have been built out in gungahlin and the monloglo valley or do we want a return to the traditional Canberra of decent blocks between 700 and 800 m2. And PLEASE enough with the developer fairy stories that they are giving smaller block sizes because that is what people want.
People are buying them because THAT IS THE ONLY THING THEY CAN AFFORD!
There is a truism in government and property development, never get between a politician or a property developer and money, especially money that is an obscene profit.

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