The election result and rate cut have changed the equation for buyers, with more looking for a detached house. Photo: Michelle Kroll.
The election result and the expectation of an interest rate cut have injected confidence into the ACT housing market, with the resurgent interest in detached homes driving a 0.5 per cent rise in house prices in May, according to the Cotality Home Value Index.
The unit and townhouse market was flat to peg back the overall rise to 0.4 per cent for a median of $855,000. The house median was $975,000 and the unit median almost $595,000.
The rise for houses follows a 0.4 per cent increase in April, while the attached market slipped -0.1 per cent after a 0.3 per cent rise the month before.
Agents reported that since the election there had been more interest from would-be buyers, with open homes and auctions attracting higher numbers.
Some were now wanting to get into the market before prices started to rise, particularly with more interest rate cuts to come and more government incentives to kick in.
The relief over the Coalition’s public service policy of axing 40,000 jobs had translated into a new certainty in the market, and much of this new energy had been directed at houses.
The Property Collective’s Will Honey said more people were interested in entry-level single homes around the $700,000 mark, indicating some had lifted their horizons from an apartment or townhouse to a house and land.
Mr Honey said that since the election, he had noticed a change in attitude from home hunters after waiting on the sidelines all year.
He said the result and the 20 May rate cut had firmed their intentions for both the established market and projects.
“Rewind the clock a couple of months, it was just research and research and research; now it’s a bit more buy-buy-oriented,” he said.
Independent Property Group director of operations Narelle Casey said the new-found confidence had brought out all different types into the market, not just a concentration on the lower end.
“Well, they’re getting value any which way,” she said.
“If you’re buying at the bottom of the cycle, you’re always getting value. If you’re buying and selling in the same market, well, it doesn’t really make a lot of difference unless you only bought a couple of years ago.
“But if you’re a downsizer and you’ve purchased a property 20-odd years ago, then you’re looking at a substantial uptick in your initial investment anyway.”
Canberra prices are now in recovery mode after receding over much of the past year.
On an annual basis, they are -0.7 per cent lower, with houses -0.5 per cent down and units -1.4 per cent, and still -6.4 per cent off the May 2022 peak. But over the past five years, they have risen 30.5 per cent.
Molonglo (2%), Belconnen (0.9%) and Tuggeranong (0.5%) lead the annual growth figures, while South Canberra (-2%), Gungaghlin (-1.4%), Weston Creek (-1.5%), Woden Valley (-1.7%) and North Canberra (-3.1%) were in negative territory.
Overall, Canberra prices remain the third highest of the capital cities, behind Sydney and hotspot Brisbane, but for units the third lowest.
Nationally, prices rose 0.5 per cent in May, taking the national index 1.7 per cent higher over the first five months of the year.
The gains were broad-based, with every capital city posting a rise of at least 0.4 per cent.
“The continued momentum we’re seeing across almost all markets is no doubt being fuelled by rate cuts – both those that have already happened, but also potential cuts in the coming months,” said Tim Lawless, Cotality’s research director, who also noted that auction clearance rates had picked up following the RBA’s 20 May board meeting.
Cotality says the capital city trends have shown a clear convergence, with the range between the highest and lowest annual change in dwelling values, at 9.8 percentage points, not being this narrow since March 2021.
This is being driven by a slowdown in value growth across mid-sized capitals, while previously softer markets like Melbourne and the ACT move back into growth.
The rates cuts are also fuelling a resurgence in the top end of the market in Sydney and Canberra, which are the only capital cities where the upper quartile is showing a stronger quarterly growth trend than the lower quartile.
