Canberra’s white-hot housing market is showing no signs of cooling after prices surged a further 1.7 per cent in May amid an insatiable demand for property.
Cheap money is the main factor but limited supply, especially in the stand-alone house sector, is also contributing to suburb records being smashed across the city.
Independent Woden principal Mark Wolens said that in real terms, despite the high prices, housing in Canberra is relatively affordable.
He says the percentage of income going to repayments in Canberra maybe 18 to 25 per cent compared to Sydney where it might be 40 per cent.
“Our housing has been relatively cheap in real terms for quite some time and some might scoff at that. The whole of Australia is moving, but it also could be a sign that Canberra is catching up.”
Mr Wolens said demand is strong across the ACT and Queanbeyan and the numbers he is seeing at auctions are extraordinary.
At an auction in Weston last weekend a three-bedroom ‘moderate’ house attracted 15 or 16 registered bidders with the property going for just under the million dollar mark at $965,000.
Mr Wolens said Weston Creek is particularly popular due to having great access to Woden Town Centre and the city, as well as Belconnen.
Even older style apartments such as those in Queanbeyan that would not have moved 12 to 18 months ago are now selling.
Mr Wolens said recent results for land sales had been extraordinary and that is also filtering through the market.
He agreed that some of those looking for a house have had to adjust their aspirations and aim for a townhouse or apartment.
Townhouses are a standout and a development in Denman Prospect was 50 per cent pre-sold before its public release to the market – something that hadn’t happened for a few years.
“If you’re in the housing market then you’ve done quite well and you can trade up,” Mr Wolens said.
“A change-up on current interest rates would probably cost you less than it would have in dollar terms than when you bought the house.”
Mr Wolens said that while a few investors are returning to the market most of the interest is from live-in buyers, and first-home buyers are a strong part that.
“Six months ago we weren’t expecting to be in winter and the market so strong and it doesn’t look like abating,” he said.
The million-dollar barrier has been well and truly breached with seven of the top 10 sales last weekend bringing bids over that mark.
The latest Core Logic data shows houses adding a another two per cent to their value for a median price of $853,000, while units and townhouses rose 0.5 per cent taking the median value over the half a million dollar mark.
Housing values have risen almost 10 per cent this year – houses 11.4 per cent and the rest 4.1 per cent
Nationally, the May rise was 2.2 per cent and broadly based across geographic regions, but Sydney recorded the largest capital gain over the past three months with values up 9.3 per cent.
Despite the boom, the Reserve Bank has left interest rates untouched and CoreLogic expects prices to continue to rise throughout 2021 and into 2022 but at a slower pace.
“Domestic demand should continue to be supported by the expectation that mortgage rates will remain at their record lows for some time, as well as the ongoing high levels of consumer confidence as the economy expands at a faster than average pace,” it said.
While listings remain low, new supply is in the pipeline as record building approvals start to translate to homes being constructed.