Town centre apartments have been the target of buyers at the lower end of the market. Photo: Ian Bushnell.
A possible interest rate cut on 20 May and incentives for first home buyers, no matter who wins Saturday’s federal election, are likely to keep Canberra’s home prices on their steady upward path.
The latest monthly Home Value Index from Cotality, formerly CoreLogic, shows prices in the national capital continuing to rise, albeit in small increments.
Overall prices were up 0.4 per cent in April, the same for standalone houses and 0.3 per cent for townhouses and units.
The median prices were $864,343 (overall), $977,737 (houses) and $594,602 (townhouses and units).
Canberra remains the third most expensive capital city overall, behind Sydney and boomtown Brisbane, and again for houses. However, it is now only more expensive than Hobart and Darwin when it comes to townhouses and units.
While prices in other smaller capitals, such as Perth, Adelaide and Brisbane, have been surging, Canberra has seen marginal rises this year.
The key figure is the quarterly one for units and townhouses, a 1.5 per cent increase compared with just 0.4 per cent for houses.
The Property Collective’s Will Honey said this confirmed the hunt for affordability, particularly among apartments in the town centres.
Mr Honey said there had been a lot of sales activity in that bracket, lifting the bottom end of the market.
That may change next month, with what Mr Honey hopes will be the first of a couple of interest rate cuts and the introduction of incentives for first-home buyers, regardless of who wins the election.
Canberra this year has been experiencing marginal rises. Table: Cotality.
Mr Honey said more than one cut would be needed to get the market moving again.
That could be on the cards, with today’s CPI figures (headline 2.4% and core 2.9%) indicating the inflation battle may be won, combined with the economic uncertainty fuelled by the Trump Administration’s tariff policy.
The big banks are predicting three cuts – by ANZ in August and by the CBA, NAB, and Westpac by the end of the year – for an eventual cash rate of 3.35 per cent.
“I think if we get some consecutive action, then we could be in for a pretty busy spring this year,” Mr Honey said.
He believes that rate cuts and government support for first-home buyers will restore confidence, but he doesn’t expect a price surge, just incremental rises.
A greater borrowing capacity would attract more buyers into the market and raise the horizons of those already looking, stimulating more interest in more expensive stock, such as larger apartments, townhouses, and standalone houses.
Mr Honey said that well-presented homes, regardless of the sector, were still selling, especially at the higher end, but April had been a disrupted month due to public holidays, with subdued activity.
Cotality Head of Research Eliza Owen said Canberra had experienced consecutive increases in the past three months, probably stemming from February’s rate cut.
Ms Owen said this was a small recovery from a fairly weak market. Over the 12 months to the end of April, prices were still down 0.6 per cent and 6.4 per cent off the all-time high in May 2022. But over the past five years, prices had soared 31.5 per cent.
She said the performance of the unit market over the last three months bucked the trend in other capital cities where house prices were rising faster, particularly in Sydney, Melbourne and Brisbane.
South Canberra led the district growth rates over the quarter, up 2.3 per cent over the three months across all dwellings, and the same for houses and units.
Molonglo was also strong, with a result of 1.4 per cent, and Gungahlin recorded 0.9 per cent. In contrast, the weakest market result was North Canberra, where values decreased by 0.5 per cent, marking the only area to decline.
The rest of the market was generally up about 0.5 per cent.
Ms Owen agreed that a 25-basis-point rate cut, combined with first-home buyer incentives, would encourage more people to enter the market, but also increase prices.
