More buyers are looking for a detached home as interest rates fall. Photo: Michelle Kroll.
Canberra apartment and townhouse owners are making their move to upgrade to detached houses as interest rates fall, helping to push house prices up 1.1 per cent in June.
Cotality’s Home Value Index for June shows Canberra residential property overall rising 0.9 per cent but the standalone house is doing the heavy lifting, with units and townhouses up only 0.3 per cent.
The Property Collective’s Jacob Stanton said upsizers and investors were offloading medium and higher density properties in an already crowded market in those sectors.
Mr Stanton said the first home owner bracket up to $750,000 was very competitive but there was now a lot of interest in homes up to $1.5 million.
“It’s a good time in the market where that gap or that jump from a unit to a house has been more competitive due to softer house prices, so that’s one element where more units come to the market because people are making that move,” he said.
“We’re probably seeing a bit of an exiting of investors and that could be due to previously higher interest rates, affordability, land taxes, increased strata fees and holding costs for investment properties have been higher.”
That means plenty of choice for first home buyers now feeling more confident of getting on to the first step of the housing ladder but it also is putting pressure on the much fewer number of houses available.
Mr Stanton said the interest rate cuts and likelihood of more to come was creating more urgency in the market, although nothing like the FOMO of the COVID-era boom.
“What we’ve noticed on the front lines, especially in houses, buyers are starting to get more confidence,” he said.
Mr Stanton said mortgage brokers were reporting more applications for pre-approvals, usually an indication that more people were looking to buy within the next few months.
He said falling interest rates should also encourage owners who had been sitting on the sidelines to list their properties as more buyers came into the market.
“I think that there’s going to be a bit of confidence from buyers and sellers,” Mr Stanton said.
“More sellers are going to start thinking this might be a really good time to sell.”
The 1.1 per cent rise in detached house prices in June pushed the median closer to the million dollar mark at $980,800.
In 2025 they have increased 1.5 per cent and for the financial year returned to the black at 0.5 per cent.
The June median for units and townhouses stayed at nearly $595,000, while the median for all housing types was $855,000.
The developing suburbs of Molonglo continued to lead annual price growth for all housing types at 3.7 per cent, followed by Tuggeranong (2.5%) and South Canberra (1.5%).
Woden (0.2%) and Belconnen (0.1%) were just in the positive but Gungahlin (-0.5%), Weston Creek (-0.8%) and North Canberra (-2.9%) remained in the red.
Nationally, Australian housing values rose by 0.6 per cent in June, marking a fifth straight month of growth following the -0.3 per cent dip between November and January.
Monthly gains were recorded across almost every broad region of Australia, except Hobart (-0.2%), the only capital city or rest-of-state region to see a month-on-month fall.
Cotality research director Tim Lawless said falling interest rates had been a clear catalyst behind the renewed momentum.
“The first rate cut in February was a clear turning point for housing value trends,” he said. “An additional cut in May, and growing certainty of more cuts later in the year have further fuelled positive housing sentiment, pushing values higher.”
But the pace of growth remained mild compared to mid-2023 when the quarterly rate of growth in national home values peaked at 3.3 per cent and positively tepid relative to the extreme 8.1 per cent quarterly peak growth recorded through the height of the pandemic.
The rebound was occurring against a backdrop of relatively low home sales, with low stock levels.
Overall, Mr Lawless said the tailwinds of lower interest rates, higher confidence, tight labour markets and low housing supply were likely to outweigh the headwinds, providing the foundations for further modest growth in housing values in 2025.
