Canberra’s property market has turned a corner, making positive gains in May to join the national real estate recovery.
After assertions that the Canberra market had ‘bottomed out’ in April, the national capital made up ground last month with a 0.4% increase in property values, the CoreLogic Hedonic Home Value Index shows.
The improved market conditions are welcome news after month-on-month losses and a stagnant April when no growth was recorded.
Data shows Canberra property values have slipped by 8.8% in the past year. The median dwelling value in Canberra is now $825,053 – a heavy hit on the median a year ago, which was just shy of $1 million.
MARQ Partner and Licensed Agent Justin Taylor said the gains were encouraging news for the local market and expected Canberra property to make further advances in coming months.
“The worst of the market is behind us and I think from this point on, we will gradually start to see prices creep up,” Justin said.
“Stock levels are 30% down on what we would normally see, so I suggest that is helping to keep prices at a certain level as well. In fact, the increased competition is what drives prices upward. There is a group of buyers who are thinking that maybe now is the time to buy.”
CoreLogic Research Director Tim Lawless said the strengthening national market was a symptom of persistently low levels of available supply running up against rising housing demand.
“With such a short supply of available housing stock, buyers are becoming more competitive and there’s an element of FOMO creeping into the market,” Tim said.
“Amid increased competition, auction clearance rates have trended higher, holding at 70% or above over the past three weeks. For private treaty sales, homes are selling faster and with less vendor discounting.”
Justin said the Canberra property market was generally more resilient and was shielded by a number of factors, including strong employment, job security and high incomes.
“The Canberra market operates differently to the rest of Australia. It’s less volatile. It’s more stable,” he said.
“The average incomes are still very high – probably the highest in the country, job security is very good, unemployment levels are very low. People are interested in property, people want to own property, people want to buy property.”
On the rental front, CoreLogic data shows units remained in a stronger position than houses with the annual change in rents for houses dropping by 3.2%, while units saw growth of 1.5% in the same period. The gross rental yield across all dwellings is now 4.1%.
Tim said unit markets across the country were likely to be experiencing higher rental growth for several reasons. Capital city unit rents are about 9.5% cheaper than house rents, although a year ago the gap was 14.8%.
“There is also the additional demand for higher density styles of rental accommodation linked to the return of foreign students and overseas migrants, with regions popular with recent migrant arrivals tending to be higher density,” he said.
“Rental demand in inner-city precincts may be seeing an increase in popularity as workers return to the office and CBDs become more vibrant.”
Meanwhile, the Reserve Bank of Australia Board is due to meet on Tuesday (June 6) to make a monetary policy decision and discuss another possible interest rate rise.
In May, the RBA lifted the cash rate another .25 percentage points to 3.85% after a month’s pause, marking the 11th interest rate rise in the past year.