After weeks of persistently high auction clearance rates, the CoreLogic Hedonic Home Value Index results reported property values in Canberra increased by 1.9% during February. This was comprised of house values increasing by 2.2% and units 0.7%. Robust growth across both market segments demonstrates the most expensive place in the real estate market is sitting on the sidelines.
Housing values are rising across each of the capital city and rest of state regions, demonstrating the diverse nature of this housing upswing.
According to CoreLogic’s research director, Tim Lawless, a synchronised growth phase like this hasn’t been seen in Australia for more than a decade.
“The last time we saw a sustained period where every capital city and rest of state region was rising in value was mid-2009 through to early 2010, as post-GFC stimulus fuelled buyer demand.”
Sydney and Melbourne were among the strongest performing markets, recording a 2.5% and 2.1% lift in home values over the month respectively, as Australia’s two largest cities caught up from weaker performance through 2020. The quarterly trend, however, is still favouring the smaller cities; Darwin housing values rose 5.5% over the past three months, Hobart values rose 4.8% and Perth is up 4.2%.
“Whether this newfound growth in Sydney and Melbourne can be sustained is unclear. Both cities are still recording values below their earlier peaks, however, at this current rate of appreciation it will not be long before Australia’s two most expensive capital city markets are moving through new record highs. With household incomes expected to remain subdued and stimulus winding down, it is likely affordability will once again become a challenge in these cities,” Mr Lawless said.
Canberrans have the enviable position of residing in the second most affordable jurisdiction for housing and rental costs, calculated by the percentage of median weekly household income devoted to paying average mortgage or rental commitments. Affordability has been key to insulating Canberra’s property market against adverse conditions, and in this cycle could see values continue rising after other cities begin to plateau.
Extremely competitive market conditions have been sustained by local demand and net interstate migration. Upon completion of the global COVID-19 vaccine rollout and the re-opening of borders to overseas travel, I believe the tap will turn back on for Canberra’s biggest driver of population growth, net overseas migration. Nominal cases of virus infection resulted in many Canberrans enjoying similar lifestyles to the ones they had pre-pandemic, albeit with social distancing and a sea of QR codes. In comparison to other cities, this ‘utopian’ lifestyle will enhance our city’s attractiveness to skilled workers.
An influx of new demand could prove detrimental for would-be buyers who have not yet adjusted their expectations to meet current market conditions.
With Sam Dodimead, local property professional and host of Canberra Property Podcast where you can get to know the consultants contributing toward delivery of new buildings. Stream from wherever you listen to podcasts.
Read the market wrap from last week here.
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