Future is bright for Canberra’s property market as Australian home values recover to record highs in March

A strengthening of real estate markets in Sydney and Melbourne could signal good news for the nation’s capital, which traditionally follows the lead of bigger east coast cities.

The latest CoreLogic Hedonic Home Value Index, released on April 1, shows that Sydney and Melbourne has turned a corner, with property values rising over the past two months.

March data shows that Melbourne sustained growth of 0.5%, while Sydney saw a rise of 0.3% – on the back of 0.4% and 0.3% respectively in February.

There was 0.2% growth across all dwelling types in Canberra in March. But contrary to February when apartments were hot property, March saw zero growth in unit values, while houses were up 0.3%.

“This data sets a promising scene for the rest of the year as Sydney’s market picks up,” said Windrose Property Principal and Sales Agent Sam McGregor.

“Canberra generally follows Sydney, albeit six months behind. So, it’s very likely that over the next three to six months, we will start to see more of an uptick because there’s a bit more confidence (and) a bit more money around.

“It seems to me it’s a good market to be buying and selling in. I still have a view that anything you buy today, you’ll be very happy in two years that you did.”

It is almost three years since Canberra’s last peak in May 2022, with property values now 6.8% lower. But five-yearly data shows good growth, with a 30.3% increase in real estate prices, and a boost of almost 60% over the past 10 years.

The median house price in Canberra is $854,398 – the third highest in the country.

Sam said while there had been a lull in listings coming to market, there was a wave of new buyers after the slight cut in interest rates in February.

“We started seeing the sentiment impact just from people talking about interest rates coming back, so the start of the year has been pretty warm in terms of deals,” he said.

“In the last month, that’s continued. I think it’s a warm market, not a hot market, and there are definitely more buyers around than there were three months ago. There’s significantly more than six months ago – and that’s being reflected in prices for the right property. It’s back to being as competitive as you could ask.”

He said the Federal election, announced for May 3, was likely to cause some short-term market uncertainty as cautious vendors and buyers temporarily shelved plans to transact.

“Interestingly, the best thing about the Federal election is it’s a short timeline from now until the election, adding two weeks of school holidays and the Easter and ANZAC Day public holidays into the mix.

“In terms of the housing market, the fact that it’s only going to be rocky for about a month – it should mean the election doesn’t impact the market too much.

“Generally, people don’t like the imbalanced nature of Federal politics, but obviously the Canberra housing market is driven a lot by government jobs so often public servants will sit tight until they know their jobs are safe.”

CoreLogic Research Director Tim Lawless said a gradual easing in monetary policy, cost of living relief, income growth, tight labour markets and improved sentiment were all likely to support housing sector activity.

“Improved sentiment following the February rate cut is likely the biggest driver of the turnaround in values, along with the cut’s direct influence of a slight improvement in borrowing capacity and mortgage serviceability,” Tim said.

“With the rate-cutting cycle expected to be drawn out, it will be interesting to see if this positive inflection in values can last in the face of affordability constraints.”