Market caution continues: Canberra property price dip in step with national downswing

Canberra’s real estate market has taken another dive, mirroring a national downturn in residential property values in September.

The Cotality Home Value Index, released on Thursday, shows property prices in the ACT dropped by 1.1% in the first month of spring – the fifth consecutive month of decline.

Apartment and unit prices took a heavier hit, dipping by 1.3%, compared to houses which saw a 1.1% decline, in line with the national downswing of 1.1% for the month.

The new research comes two days after the Reserve Bank of Australia announced it would lift the cash rate to 4.6% – the fourth interest rate hike this year and highest level in 15 years.

Windrose Property Principal and Sales Agent Sam McGregor said while there had been an overwhelming sense of caution amongst both buyers and sellers during what is usually a traditionally busy peak selling month, house hunters were still active.

“The picture on the ground is the most meaningful indicator of the market. I’m seeing buyers being more active than I probably have for 12 months and that’s probably the opposite of what you would expect,” Sam said.

Sam said despite affordability constraints, climbing interest rates and higher living costs, well-priced and well-presented properties were still transacting. He said he was having direct and pointed conversations with vendors about their sales expectations this spring.

“Generally, it’s one of the best times I’ve seen in real estate because buyers are active, they’re wanting to make a decision. Vendors, if they’re on the market, are wanting to sell, not holding out for last year’s price,” Sam said.

“The conversations I’m having with vendors at the moment is: ‘You can be ‘on the market’ or you can be ‘in the market’.

“You can sit on the market or you can be in the market selling, which means we need to be priced appropriately to attract buyers and we need to be presented well.

“It’s actually quite a functional market because people understand where they’re at. Everyone understands that we’re in spring 2026, not spring 2020. It’s the world we’re currently in.”

Cotality said the latest interest rate hike would weigh on housing demand and higher mortgage rates would reduce borrowing capacity and impact serviceability.

“With household debt at high levels, borrowers are far more sensitive to interest rates compared with almost 15 years ago when interest rates were previously this high,” said Cotality Research Director Tim Lawless.

“Borrowers are not only facing higher mortgage costs, but also an extended period of elevated living expenses and negative real income growth. Together, these pressures are narrowing the pool of buyers able to qualify for a mortgage and reducing the amount they can afford to pay.”

The report found that housing turnover has also eased, with the number of home sales over the past three months tracking 19.1% lower than a year ago nationally and 13.3% below the previous five-year average.

“The lift in available stock is improving choice for buyers, but ironically, many prospective buyers don’t have the confidence or financial capacity to buy at the moment,” Tim said.