Home prices in Canberra were up slightly in March, according to the PropTrack Home Price Index released today, largely due to strong rebound in immigration, tight rental markets, (slowly) increasing wages growth and low volumes of new listings. 

The report found that home prices in Canberra increased 0.03% in March compared to February, as the low level of stock available for sale and sustained buyer demand insulated home prices.

Key ACT findings from the report

• Price falls in Canberra picked up slightly in March after remaining unchanged in February. Prices were up 0.03% month-on-month.
• The growth was driven by unit prices, which were up 0.06%, compared to 0.02% for houses.
• Despite the small increase, home prices in Canberra remain 5.98% below their peak in March 2022, but still well above pre-pandemic levels in March 2020 (+34.7%).

Key national findings

• National home prices have reversed their downward trend, with price falls easing into the end of last year and now moving upwards.
• National home prices were largely stable in March, rising slightly by 0.13%. The cumulative increase in 2023 is now 0.49%.
• While home prices have fallen from their peak in most markets, prices nationally are still 29.9% above their pre-pandemic levels.
• Prices increased in most capital cities, except Hobart (-0.43%), Darwin (-0.10%) and Brisbane (-0.06%), with Sydney (+0.27%), Perth (+0.24%) and Melbourne (+0.12%) recording the largest increases.
• While interest rates have been the primary driver of price falls to date, the recent upturn has been influenced by the limited supply of properties for sale.
• Even though buyer demand is weaker than peak levels seen last year, softness in new listing volumes and tight supply has offset this, leading to a pickup in competition among potential buyers that has buoyed values.

Findings suggest that while the significant reduction in borrowing capacities and deterioration in affordability caused by interest rate rises implies larger price falls, the impact of rate rises is
being counterbalanced. Positive demand drivers offsetting the downwards pressure include the strong rebound in immigration, tight rental markets and (slowly) increasing wages growth. The sustained softness in new listing volumes is also keeping a floor under prices.

The report suggests if the RBA pauses its tightening cycle in April or May, the bottoming process may continue, with home prices stabilising further. Some of the uncertainty buyers have experienced with respect to borrowing capacities and mortgage servicing costs will also ease and may boost confidence.

However, headwinds remain, with the full impact of recent rate rises yet to be felt. This means the decline in prices could still find a second wind, particularly if new listing volumes increase in the coming months, the findings suggest.

For PropTrack insights visit: proptrack.com.au/home-price-index