For the first time in three long years, average house prices in the ACT fell during May – but don’t get too excited.

The median monthly residential property price declined just 0.1 per cent in the Territory, according to CoreLogic’s latest Home Value Index.

Remaining the country’s second most expensive property market behind Sydney, Canberra has experienced consistent price growth since July 2019 – until last month. Although dwelling values increased 2.2 per cent in the three months to May, softer house values and affordability constraints are likely to have had an impact. 

Even with the marginal drop in May, the report shows the ACT’s housing values continue to be 37.9 per cent higher than pre-pandemic levels.

The market momentum has slowed slightly, which CoreLogic research director, Tim Lawless, says is a national trend, but housing affordability is still set to worsen.

“There’s been significant speculation around the impact of rising interest rates on the property market and last month’s increase to the cash rate is only one factor causing growth in housing prices to slow or reverse,” Mr Lawless said.

“It is important to remember housing market conditions have been weakening over the past year, at least at a macro level.”

He said that shortly after a peak in consumer sentiment and an increase in higher fixed mortgage rates, the quarterly rate of growth in national dwelling values peaked in May last year.

“Since then, housing has been getting more unaffordable, households have become increasingly sensitive to higher interest rates as debt levels increased, savings have reduced, and lending conditions have tightened,” Mr Lawless said.

“Now we are also seeing high inflation and a higher cost of debt flowing through to less housing demand.”

Canberra top 8 suburbs with lowest quarterly dwelling value growth

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