Canberra has managed to stave off the greater property price falls experienced in Australia’s larger east coast capitals, as hopes emerge for a more stable real estate market in 2023.
The CoreLogic Hedonic Home Value Index, released on Tuesday, shows Canberra rounded out the year with another price fall as property values slipped another 1.2%, resulting in a 3.3% drop for the 2022 calendar year.
But the data shows Canberra fared better than the national average, which saw a 5.3% decline in values across all regions for the year. Sydney sustained the heftiest falls by 12.1%, while Melbourne saw an 8.1% weakening.
On the upside, the median dwelling value in Canberra is now $846,993 – the second highest in the country to Sydney, which is sitting at just over $1 million.
Despite the downturn, Canberra’s house values are still well above pre-COVID levels. Since the onset of COVID, property prices in the ACT skyrocketed by 38.3%, but have gradually slipped by 7.6% since June last year.
MARQ Partner and Licensed Agent Craig Chapman said traditionally there was an increase in the number of new listings on market at the start of the year and he expected that to play out in coming weeks.
“Usually, we see a surge of new listings come to market at the start of the year when people have considered what they will be doing in the year ahead and assessed their priorities,” Craig said.
“That increase in activity will still happen but we are likely to see a more measured approach given ongoing speculation that the Reserve Bank of Australia could increase the cash rate when it reconvenes in February and the impact that will have on mortgage loan repayments.
“On the whole, I think the market will stabilise in 2023, particularly if there is a hold on interest rate rises.
“There are a lot of variables that make up this picture, including reduced borrowing capacity of buyers and the ongoing threat of interest rate rises, but Canberra is resilient and better placed than most regions with strong employment driven by the public service.”
“Canberra is also a very transient city, so traditionally we also see an influx of new people moving to the ACT at the start of the year for work or university studies. This activity often increases housing demand in the first quarter.”
CoreLogic Research Director Tim Lawless said 2023 would be characterised by further falls in home values in some regions, but house prices would stabilise once interest rates peaked.
Interest rates and mortgage rates would be a major influence on housing market outcomes this year, he said.
Since May last year, the Reserve Bank of Australia has raised the cash rate by 3.1% – the highest in 10 years – and analysts expect a further increase when the Board next meets in February.
CoreLogic said the 5.3% drop in housing values in 2022 marked the first time since 2018 that national home values had fallen in the calendar year.
In addition, the year to December signified the largest calendar year decline since 2008, when values dropped 6.4% during the Global Financial Crisis and successive interest rate rises.