Canberra buyers emerge as prices fall for the third consecutive month

Cautious Canberra buyers are starting to come out of the woodwork after months of biding time on home purchases, trying to buy at the bottom of the market cycle.

After months of concern about inflation, higher interest rates, cooling market conditions and housing policy changes for investors, the awakening comes as property prices in the ACT dipped for the third consecutive month in June.

Housing values fell 0.6% for the month, down 1.3% for the quarter.

The latest Cotality Home Value Index, released on Tuesday, shows the median dwelling value is now $885,254. Houses are $1.035 million and apartments and units $597,430.

Windrose Property Principal and Sales Agent Sam McGregor said he had been surprised at the number of buyers who had surfaced in June, many of whom had been sitting back watching how market conditions would unfold.

“On paper, this should have been the worst month in real estate that anyone could possibly have seen in the last five or six years. In reality, it hasn’t been that,” Sam said.

“The sky isn’t falling. The bottom certainly isn’t falling out of the market.”

Sam said winter was traditionally a quieter marketplace, but more and more buyers were accepting the current climate and limited stock levels, which had driven recent sales.

“I’m seeing deals come together that I wouldn’t have expected a few months ago, and at higher price points than the market talk would suggest,” Sam said.

“We’ve recently matched buyers with a few genuinely one-of-a-kind rural properties – the kind of homes that only ever suit a small pool of people, so they take their time to find the right owner. That’s not a market signal; it’s just the nature of unique and often high-end property.”

Sam said the timing of those sales was the real story.

“The fact those buyers came forward now, in the thick of all the weaker-market rhetoric, tells me demand hasn’t gone anywhere and stock is still tight. When the right home comes up, the right buyer stops sitting on their hands and acts – and that’s exactly what we’re seeing.”

From July 1, the ACT has abolished stamp duty for first homebuyers, and extended the exemptions to downsizing pensioners, eligible National Disability Insurance Scheme (NDIS) participants and buyers who have not owned property in the last five years.

Federal reforms for negative gearing and capital gains tax have seen many investors reconsider their position in the property market.

Sam said first homebuyers were realising that the bottom was not going to fall out of the market, and that sentiment was bleeding into other owner-occupier cohorts.

“They’re realising with all the wars, inflation and fuel costs, that if the market is still strong then it’s got to be a good time to buy a house.”

He said rhetoric about changes to government policy and tax changes impacting investors had overshadowed the biggest pool of buyers, which were owner-occupiers.

“There’s been a lot of conversation about the Budget and changes to investor incentives, but investors aren’t the biggest driver as to why people buy a house.

“Really, the number one reason is that people decide to move because they need somewhere bigger to live or somewhere closer to work and schools. Investors are a smaller portion of the market. Conversations about investment are really more of a placeholder for general market sentiment.”

The Cotality report found every state and territory had suffered a sharp slowdown in the rate of growth in June. Nationally, the index dropped 0.4% for the month, marking the largest month-on-month fall since December 2022.

Cotality Research Director Tim Lawless said the downward revision across the country reflected a rapidly changing market.

“Weaker conditions through the second quarter of the year are attributable to an array of downside factors,” Tim said.

“Even before interest rates rose by 75 basis points, we were seeing affordability hurdles weighing on buyer demand. Higher cost-of-living pressures, deeply pessimistic sentiment and a further dampening of demand via property taxation changes announced in the Federal Budget are all contributing to weaker housing conditions.”