Canberra real estate values were unchanged in April, as speculation mounts that property prices have ‘bottomed out’ and the market cycle will soon show signs of improvement.
The CoreLogic Hedonic Home Value Index, published on May 1, found Canberra was now in the midst of a cyclical trough, along with Hobart and Darwin, evidencing that Australia’s housing downturn was over.
In April, Canberra’s property values across all dwellings did not change, recording 0.0% growth, but the city experienced a 1% dip in the past three month quarter.
The median dwelling value in Canberra is now $839,732.
Values surged by 38.3% between the onset of COVID in 2020 and the city’s peak in June 2022, but prices have declined by 9.5% since then. CoreLogic said Canberra had hit the bottom of the cycle last month.
The report shows rental prices for houses dropped by 1.8% in the past year, while the unit and apartment market fared better with price growth of 2.4%. The gross rental yield across all dwellings is 4.1%.
On Tuesday, the Reserve Bank of Australia lifted the cash rate another .25 percentage points to 3.85% after a month’s pause. It marks the 11th interest rate rise in the past year, putting more pressure on homeowners amid growing mortgage repayments and extreme cost of living pressures.
MARQ Partner and Licensed Agent Justin Taylor said there was evidence that the Canberra market had bottomed-out, although there was an improved sense of buyer confidence across some sectors.
“Logically, that would tell us that the bottom of the market has come and the next step is that the market will start to move up. That means there may be a little bit more buyer confidence,” Justin said.
“Eleven interest rate rises in a year has done a lot of damage. I don’t think you can ever pick the bottom of the market but buyers have probably realised that if it’s not at the bottom now, it’s very close, so it’s probably a good time to buy.”
Justin pointed to recent analysis by CoreLogic that showed 35% of Australian suburbs analysed in the March quarter had experienced an uplift in dwelling values. This is up from 19% in the December quarter and a significant improvement in the three months to December when 16.5% of suburbs experienced growth.
“If 35% of Australian suburbs experience growth and the regional areas are leading the way, and for all accounts Sydney has had many suburbs increase in value in the March quarter, I don’t think Canberra is far behind,” he said.
“A normal market cycle is prices go up, they reach a peak, they plateau for a period, they go down and then they reach the bottom and they might plateau for a little while before they start creeping up again – that’s a normal cycle. So, that tells me we’re right at the bottom of the market.”
Justin said pricing was still key to attracting successful sales, no matter the market conditions.
“No matter how good or bad a market is, if you price homes correctly, they will attract a lot of interest. The trick is if you price homes to meet the current market conditions, you will get a lot of buyers.
“Even this week, myself and Dimi (Romero) have had offers on two properties and sold one prior to auction.
“Stock levels are still down on what it was, but as confidence grows and people start to see properties selling and see statistics that prices are on the way up, that will give sellers a bit more confidence that they can put their home on the market and expect a decent result.”
CoreLogic’s Research Director Tim Lawless said it was becoming increasingly clear the national housing market has moved through an inflection point.
“Not only are we seeing housing values stabilising or rising across most areas of the country, a number of other indicators are confirming the positive shift. Auction clearance rates are holding slightly above the long run average, sentiment has lifted and home sales are trending around the previous five-year average,” Tim said.
“This could be contributing to a broader perception that the market has bottomed out, and for those attempting to time the market, that it is considered to be a good time to buy.”
Tim said it was interesting that the trend towards more positive housing market conditions had occurred while interest rates remain well above average.
But he said any material increase in housing values was not likely until interest rates reduce, credit policies ease or housing focused stimulus was introduced.
“The last time we saw housing values trending higher through a rising interest rate environment was during the mid-to-late 2000’s when the mining boom was underway. This period was also characterised by surging net overseas migration that contributed significantly to housing demand,” he said.