Weston Creek has been the standout performer over the past 12 months, but prices there are now falling. Photo: Region.
Canberra house prices continue to fall, but buyers are caught in a market paradox as higher interest rates and stiffer borrowing conditions narrow their choices.
The Cotality Home Value Index for September shows an overall drop of 1.1 per cent, bringing the median Canberra price to about $860,000.
It comes a day after the Reserve Bank hiked interest rates to their highest level in 15 years in a bid to stamp out inflation.
Houses have been losing more value than units and townhouses, but in September this reversed, with the former down 1.1 per cent and the latter 1.3 per cent.
But the quarterly figure shows houses down 3.5 per cent and units and townhouses down 2.4 per cent. Over the year, the losses are about the same.
Canberra residential property has now lost 6.2 per cent or an average $57,000 in value since the record May 2022 peak, but is still 55.8 per cent in the black over the decade.
Median prices for houses and other typologies were $1,006,000 and $582,000, respectively.
Cotality research director Tim Lawless said Canberra’s 3.2 per cent fall overall through the September quarter was slightly less than the national average of -3.7 per cent. All capitals except Darwin fell.
He said that every district market fell over the month, quarter and year to date.
Canberra residential property has now lost 6.2 per cent or $57,000 in value since the record May 2022 peak. Table: Cotality.
Over the 12 months, Tuggeranong and Weston Creek had held out to stay positive, for now.
“But it looks like both those markets are on the precipice of moving into annual negative change as well, given Tuggeranong’s only up 0.6 per cent in 12 months and Weston Creek’s up 1.3 per cent.”
Both have attracted buyers seeking family homes and value under the $1 million mark.
Weston Creek’s median is $964,513, while Tuggeranong’s is $867,271.
The other districts have all lost value over the year: Gungahlin ($888,562) -1.0 per cent, Belconnen ($837,042) -1.1 per cent, Molonglo ($728,353) -1.6 per cent, South Canberra ($802,469) -3.8 per cent, Woden Valley ($1,018,637) -3.8 per cent and North Canberra ($698,134) -4.4 per cent.
Mr Lawless said the unit market seems somewhat insulated, probably because it has been much softer in its medium-term growth trajectory.
“And it probably has that affordability advantage and is becoming more and more important in the marketplace and maybe not quite as sensitive to higher interest rates as other parts of the market,” he said.
Mr Lawless said there had been a pile-up of stock as properties took longer to sell and patient buyers became more discerning.
He said there had been a small seasonal rise in new listings, but they were down about 6 per cent from the same period a year ago and about 15 per cent below the five-year average.
Fewer prospective vendors were willing to test the market given “pretty shabby” selling conditions.
The silver lining was that housing is becoming more affordable, at least in terms of the dwelling price-to-income ratio, but servicing a loan was the problem.
“The fact that housing values across Canberra are down from their peak by about $57,000 has been offset by the fact that mortgage repayments have gone up and borrowing capacity has been eroded to the tune of about $90,000,” Mr Lawless said.
He said the good news over the medium to long term for buyers was that interest rates won’t stay this high forever, and when the rate-cutting cycle shows itself, the market will probably start at a much more affordable level.
But unwinding the rate increases would likely be a slow process.
“We’re expecting values will continue to drift lower through the rest of the year and into next year until we start to see a bit more confidence return to consumers and an expectation that the next move is going to be downwards,” Mr Lawless said.
“I think that’s still some way off.”
