1 March 2024

February kick suggests Canberra home prices might be on the move again

| Ian Bushnell
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For sale sign at townhouse

There appears to be increased demand for units and townhouses. Photo: Ian Bushnell.

Canberra’s residential property market appears to have broken out of its holding pattern, with values jumping in February after months of barely moving or experiencing slight falls.

Overall values rose 0.7 per cent, higher than the national rate. Houses performed slightly better than units and townhouses, although the latter seem to be on the rebound.

CoreLogic reports an overall median value of just over $840,000. Over the year, that’s an increase of 0.6 per cent.

Detached houses increased in value by 0.8 per cent, with a median of $967,000, while units and townhouses were back in the black, rising 0.6 per cent for a median of nearly $587,000.

Houses enjoyed a rise over the year of 2.3 per cent, while units and townhouses were down -0.4 per cent after being in negative territory most of the year.

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CoreLogic’s Head of Research Tim Lawless said it was hard to know what to make of one month’s data, but the increases were a slight departure from the softness the Canberra market had displayed during 2023 when other capitals were defying rising interest rates, thanks to immigration and a persistent lack of supply.

“We’ve definitely seen a break in the two-month run of values falling, a pretty substantial one,” he said.

“We haven’t seen a rise of that magnitude across the ACT since April 2022, before rates started to rise.”

Home values chart

After a break over the summer, real estate in Canberra is on the rise again. Table: CoreLogic.

He agreed that renewed confidence from the pause in recent interest rate rises, lower inflation and the prospect of more rate cuts down the track could have played a role.

“There has clearly been a change in sentiment,” he said.

“It looks like households have become more confident, more optimistic.

“A rise in sentiment suggests households will have a better ability to make decisions around large financial commitments, like a property purchase.”

Relatively higher incomes favoured Canberra where affordability was not as much of an issue as in the other capitals. That could be why the demand for the generally cheaper units and townhouses had not been as great, combined with a steady supply.

Independent Property Group Woden and Weston Creek principal and director Mark Wolens said there had certainly been an uptick in demand for quality, livable one-bedroom units, particularly in the inner south.

“Better units in the inner south are selling in the high-fives and middle-sixes, depending on where they are,” he said.

Mr Wolens said there had been a bump during February, when transferees came to Canberra and people decided to change or upgrade homes.

“Sales are solid, prices are holding up,” he said.

The stable interest rate environment and the prospect of cuts later in the year also gave buyers confidence.

“They’re comfortable right now going to their limit, thinking there’s not much more pain to come. We’re at the end of the rates cycle,” Mr Wolens said.

“People aren’t as nervous buying [a better house] because they think it’s not going to cost them more money.”

Mr Wolens said that, on the sales side, some investors were selling their properties due to the double whammy of falling rents and higher operational costs.

The strongest part of the market now was the $1 million to $1.4 million zone, a bit lower than previously.

Mr Wolens said the market was not flamboyant but steady, with good properties selling, albeit some taking a little longer than others.

“Livable properties are selling within three or four weeks,” he said.

While listing remained strong, Mr Wolens said he could do with more, but people were chasing quality.

“We want more listings. We know we can sell them,” he said.

Mr Lawless said auction clearance rates had also rebounded to the mid-50 power cent mark but remained lower than those in Sydney and Melbourne.

Last week, 90 auctions were listed, and 105 are expected this week, according to CoreLogic.

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Last Saturday, 36 properties were reported sold, 14 of which achieved a sale price of more than $1 million. The median result was $1,175,000.

But while the Canberra market may have been seen to be in the doldrums last year, the February median value was still 31 per cent higher than it was at the start of COVID, a gain of almost $200,000.

Since the onset of interest rate rises in May 2022, Canberra values have slipped -6.3 per cent but remain the second highest in the country.

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devils_advocate1:04 pm 01 Mar 24

It won’t take off properly until expectations of interest rate cuts are fully cemented, at which point in-demand areas will see double-digit percentage increases within the space of 12 months

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