Forty per cent of Canberra suburbs have homes under the Home Deposit Guarantee price cap. Photo: Michelle Kroll.
Canberra’s housing market continues to operate at two speeds, with prices for detached houses surging by almost 1 per cent, while those for units and townhouses remain relatively flat.
That demand will likely soar with the new Home Deposit Guarantee in effect from today, offering 5 per cent deposits and a broader range of properties under the new $1 million price cap.
Competition is expected to be fierce among first-home buyers hoping to beat price rises that could quickly overrun the cap.
Tempering any spring enthusiasm will be the Reserve Bank’s decision to keep interest rates on hold.
Prices for all homes rose 0.7 per cent in September.
The median price for a detached house hit almost $1,022,000. So far this year, house prices are up 3.6 per cent and have increased by 3.4 per cent annually.
In contrast, the better-supplied units and townhouse sector declined by 0.2 per cent, with a median price of $600,435. This year, they are still 0.4 per cent higher, but over the past year, they have marginally decreased by -0.3 per cent.
This may change for the larger townhouses that could ride some of the Home Deposit Guarantee wave.
Demand is expected to surge with the introduction of the new Home Deposit Guarantee, which takes effect today. Table: Cotality.
The Property Collective CEO Will Honey said spring had seen more properties come onto the market and brought buyers out, including those planning to access the Home Deposit Guarantee.
While there was no overall rush, selected properties were attracting strong interest from buyers keen to seal a deal before prices increased.
“We’ve seen a couple of properties get a bit of a frenzy going on,” he said.
“For one particular property, we had 69 groups through in one open home, so over 200 people, and consequently ended up getting 15 offers.”
The majority of interest had been in homes under $1 million, particularly family homes on a nice block of land in the outer suburbs.
Mr Honey expected the Home Deposit Guarantee to provide a stimulus to the market, but wasn’t expecting a boom, especially with interest rates likely to remain unchanged for the rest of the year.
The market was likely to remain balanced, he said
Investors continued to leave the market despite high rents, keeping the supply of apartments fed and prices constrained.
“We’ve still got a lot of investors getting out of the market due to increased land taxes and rates in the ACT,” Mr Honey said.
“We haven’t had a huge influx of new apartments hitting the market; it’s just the secondhand, newer properties that people are transacting and selling.”
Cotality Head of Research Tim Lawless said the supply of detached housing continued to be tight with listings in September 21 per cent below average and 11 per cent less than this time last year.
That will feed into prices, as will the Home Deposit Guarantee.
Mr Lawless said that about 40 per cent of suburbs across Canberra have a median house value that’s at or below the $1 million price cap, and 98 per cent of suburbs have a unit that fits the bill.
He expects Deposit Guarantee buyers to be quite concentrated in detached houses.
“But it won’t be too long before the number of eligible suburbs is going to become quite limited and probably skewed towards the outer fringes,” Mr Lawless said.
“So you’re kind of funnelling more demand into a market that’s already quite tightly supplied. Demand is obviously going to be concentrated around the middle to lower end of the market. That’s probably where we’ll see the most upward pressure on prices.”
Mr Lawless said that if a house wasn’t within range, the next best option would be a low-density semi-detached dwelling, such as a townhouse or a villa.
“I wouldn’t be surprised if there is a bit of a ripple of that medium-density sector, given I don’t think it will take too long for most suburbs to breach the price caps, at least the ones that are in good locations,” he said.
Over the quarter, the strongest price growth was observed in the middle of the market, specifically in Weston Creek, with a median price of $971,000.
Molonglo and Belconnen each enjoyed about 2.4 per cent to 3.3 per cent quarter-on-quarter growth.
The weakest markets had generally been the more expensive ones, such as Woden Valley, up 0.6 per cent, then South Canberra, at 0.7 per cent. Both had a median value over the million-dollar mark.
The price rises had now graduated into the middle and higher areas of the market during the quarter, with the middle of the market up 2.1 per cent, the upper quartile up 1.6 per cent and the lower up 0.3 per cent.
“That lower quartile is obviously being influenced by the apartment sector,” Mr Lawless said.
