Canberra real estate suffered another decline, with a half a percent drop in property values in March – as the national average saw growth for the first time since April last year.
The latest CoreLogic Hedonic Home Value Index, released on Monday (April 3), shows Canberra dwelling values fell 0.5% last month, marking an 8.1% dip in property prices over the past year.
Nationally, CoreLogic’s index set a more positive tone with an increase of 0.6% in values – the first month-on-month rise since April 2022. Dwelling values increased across the four largest capital cities – Sydney, Melbourne, Brisbane and Perth – in March.
Unit and apartment prices in Canberra remained more robust than houses for the month, with units experiencing marginal growth of 0.1% while house values dropped 0.7%.
The median property price in Canberra is now $828,175.
Meanwhile, rental prices in Canberra have slipped by 0.8% for houses in the past year, but units and apartments surged by 3.2%. Canberra’s rental yield remained stable at 4.2%.
The data comes as the Reserve Bank of Australia on Tuesday pressed pause on another interest rate rise, amid softening inflation and a flat unemployment rate. The cash rate remains on hold at 3.6%, but it is expected the hiatus may be short-lived.
MARQ Partner and Licensed Agent Justin Taylor said it was likely Canberra was now near the bottom of the property cycle and expected the ‘balanced market’ to continue.
“We were in a strong seller’s market and the misconception is that people think we’re in a buyer’s market, but we’re not – this is just a balanced market now,” Justin said.
“I would say that we are pretty close to the bottom of the market. With 10 interest rate rises and predictions of a couple more, it doesn’t surprise me that some areas are now seeing prices going up because there is still a shortage of homes for sale, there’s still a shortage of housing and there’s still demand so that will hold prices up.
“Auction clearance rates are still around 60%, which is still very good.”
He attributed the solid demand and price growth in the unit and apartment market to its greater affordability.
“People expect a lot with the current house prices,” he said. “They want nice inclusions and they want quality buildings, but houses have become pretty expensive for people with interest rates going up and that’s affecting the average person’s serviceability.
“For the average borrower, every half a per cent rise affects their borrowing capacity by $40,000 or $50,000 so people who might have previously been approved for a $1 million loan are probably looking closer to $700,000 or $800,000 – 10 interest rate rises later.
“The appeal of more affordable options has propped up the unit and apartment market, especially if buying a house is out of reach at the moment.”
Justin expected this week’s pause on interest rates by the RBA to have little impact on buyer confidence in the short-term, but consecutive holds would give more market certainty.
CoreLogic Research Director Tim Lawless said the rise in national property values could be credited to the combination of low advertised stock levels, extremely tight rental conditions and additional demand from overseas migration.
“Although interest rates are high and there is an expectation the economy will slow through the year, it’s clear other factors are now placing upwards pressure on home prices,” he said.
“With rental markets this tight, it’s likely we are seeing some spill-over from renting into purchasing, although, with mortgage rates so high, not everyone who wants to buy will be able to qualify for a loan.
“Similarly, with net overseas migration at record levels and rising, there is a chance more permanent or long-term migrants who can afford to, will skip the rental phase and fast track a home purchase simply because they can’t find rental accommodation.”