Canberra property prices slipped another 1.2% in November but the rate of decline eased to a more moderate pace as the traditional end-of-year Christmas-New Year slowdown starts.
The CoreLogic Hedonic Home Value Index, released on Thursday, shows the unit and apartment market in Canberra is weathering the storm more resiliently than houses, with house values sustaining falls of 1.3% compared to units at 0.8%.
The median price across all dwellings in our city is now $869,235. Houses have hit the sub-million dollar mark at $987,450, while units stand at $600,628.
Positively, the market is still thriving on the growth made over the past two years. Since the COVID trough to peak growth in June this year, ACT housing values surged by 38.3% with falls of 6.5% since June.
MARQ Partner and Licensed agent Craig Chapman said the property market’s traditional seasonal cycle had started and buyers and sellers could expect a quieter market and less stock availability at least until the second week of January.
“The market is about to take its normal seasonal breather and once it does that it ordinarily comes back with more vigour and more excitement in the new year,” Craig said.
“Now that we are edging towards Christmas, my advice is if you’re not on the market now, it would be worth holding off until the new year when we tend to see a reasonable amount of stock come on the market then.
“In the new year, people are over Christmas, they’re back from holidays, they’re thinking about the year ahead and what it means for them.”
While property sales have tapered, Craig said Canberra’s rental market had been unseasonally busy.
The CoreLogic index shows the rate of rental increase slowed again in November, with a 5.1% rise in rents raised for houses in the past year and a 5.9% increase to units.
The rental yield is now at 4%, slightly up on the national rate of 3.7%.
“At the moment we are seeing unseasonal turnover in the rental market and more stock come to market,” Craig said.
“Officially, our vacancy rates are still low but some people seem to be consolidating. They’re downsizing from a four bedroom place and into a three-bedroom home, they’re moving in with friends. People are consolidating and getting in a position for some hurt in 2023.
“For homeowners, we expect the real pain will come in March to September when the majority of loans come off fixed terms. Our advice is, if you’re in that situation, get ahead of it. There is still an opportunity to market your home in an environment with less supply.”
It comes as analysts expect the Reserve Bank of Australia to lift the cash rate by a further 0.25 percentage points on Tuesday, taking it to 3.1% – the highest in 10 years. If that prediction transpires, it will be the eighth consecutive monthly interest rate rises this year.
The RBA does not meet in January so any further increases will not be considered until February.
CoreLogic Research Director Tim Lawless said there was still a risk that the pace of property value declines could reaccelerate, particularly if the current rate hikes persist.
“Potentially we are seeing the initial uncertainty around buying in a higher interest rate environment wearing off, while persistently low advertised stock levels have likely contributed to this trend towards smaller value falls,” Mr Lawless said.
“However, it’s fair to say housing risk remains skewed to the downside while interest rates are still rising and household balance sheets become more thinly stretched.
“Next year will be a particular test of serviceability and housing market stability, as the record-low fixed rate terms secured in 2021 start to expire.”