The ACT’s housing market was a mix of changing trends this quarter, according to Domain’s latest Quarterly House Price Report for June.
House prices rose again by 1.8 per cent to reach a median of $1.15 million, while units rose 4.4 per cent to hit a median price high of $599,735.
For the first time since 2012, Canberra became the second most expensive capital city in which to purchase a unit, and remained in its podium spot as the second most expensive capital to buy a house.
While Canberra’s house price rise may feel like another dramatic increase, Domain’s Chief of Economics and Research, Nicola Powell, said the annual rate of growth has slowed to an 18-month low, and values remain 0.9 per cent below the end of 2021’s peak price.
“While the lift in house prices did partly reverse the decline of the previous quarter, they remain just over $10,000 below the December 2021 price peak. Eased conditions are still evident, house prices remain below peak price, and the annual growth rate has eased to an 18-month low,” Dr Powell said.
“In comparison, unit price growth gained pace, reversing all the decline of the previous quarter to reach an all-time high of almost $600,000. The stronger outcome of units follows a period of outperformance of house prices, which rose 50 per cent from March 2020 to the peak in December 2021, while unit prices rose only 29 per cent from March 2020 to the current peak.
“This stark growth difference drove a record price gap, but this is now narrowing as house prices rise twice as fast as unit prices over the quarter.”
Buyer demand is steering towards units in Canberra due to affordability constraints, reduced borrowing capacity, and the value of owner-occupier first home loans hitting a high, Dr Powell said.
Additionally, investors have remained an active buyer segment, continuing to chase a tight landlords’ rental market and favourable rental returns.
“However, demand has eased with the value of investment and owner-occupier home loans below early 2022 peaks. This is helping to shift balances between supply and demand,” she said.
“The total volume of homes for sale is improving from the low earlier in the year, although it remains 24 per cent below the five-year June average. Buyers will find they are facing less competition as the volume of potential buyers per listing has been tracking lower since the September 2021 peak.
“Clear shifts are playing out across the Canberra auction market; it was the busiest June quarter on record, but clearance rates have dropped to a two-year low of 65 per cent.”
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