Property rebound: Canberra home values climb within 0.8% of 2022 pandemic-era peak

Canberra’s property market is on the precipice of its pandemic-era peak, with new data showing home values are just shy of the 2022 record high.

Cotality’s latest Home Value Index, released on April 1, shows real estate in the ACT is a mere 0.8% away from its COVID property peak in May 2022, marking a near-complete recovery after years of a softening market.

Windrose Property Principal and Sales Agent Sam McGregor said the data showed an encouraging turnaround, despite two consecutive interest rate rises this year, the conflict in the Middle East, higher fuel prices and rising cost-of-living pressures.

“This is a very, very interesting report,” Sam said. “It shows that we’re on the cusp of nearly the same price point that we were at in peak COVID four years ago, but the world environment now looks dramatically different.

“On current tracking, we are between a month or a quarter away from being exactly where we were at peak COVID, with the difference being that interest rates are significantly higher than they were at that time.”

Cotality statistics show Canberra home values rose by 0.4% across all dwelling types in March, netting 6.1% growth for the past year.

Houses saw 0.5% growth for the month to a median price of $1,048,285, while the unit and apartment market was more lacklustre, sustaining a slight boost of 0.2% to a median of $598,702.

“With 0.4% growth last month, it’s the equivalent of about 5% growth year-on-year,” Sam said. “To see that kind of growth even though interest rates have increased, it shows we’re in a market that is comparable to peak COVID in terms of price strength at the moment.

“It appears we’re coming up the other side of the property cycle where prices are going to continue to grow strongly from here.

“People understand that there’s a crunch on housing and costs at the moment. The cost-of- living for people is high, but at the same time the data is showing that housing is going to be a safe haven while everything else is a bit volatile.”

Sam said despite global insecurity and pressures on household budgets, there was still genuine interest in property.

“We are still seeing sales. I’ve sold two houses in the last week, so for the right property that is priced right, the demand is definitely there – and I think that’s going to continue,” he said.

“I’m having conversations with a lot of vendors and buyers at the moment that whilst the world feels a little unstable, one thing that always provides stability to people is property.

“People are looking for stability. While the impacts will be segmented across different parts of the market, there’s no doubt that there will be significant pressure on entry-level housing stock for at least the next three to six months where people are going to try to lock something in. They’ll buy, lock their interest rate in and be content knowing that they won’t need to worry about at least one variable in life.”

Nationally, Cotality said there had been early signs of an easing in demand, with sales tracking 1.9% lower than a year ago and 5.6% down on the five-year average.

“Given the likelihood of a further rise in cost-of-living pressures and interest rates, alongside a drop in confidence as conflict in the Middle East extends, it’s likely that purchasing demand will continue to reduce over the coming months, supporting a further slowdown in housing values,” the report stated.

The combination of affordability and serviceability constraints, along with wage growth not keeping pace with inflation, was shrinking the pool of buyers, leaving households more cautious about absorbing further rises in repayments.