Quiet confidence in Canberra market as annual growth surpasses Melbourne and first homebuyers jockey for sub-$1M homes

Canberra’s property growth has edged ahead of Melbourne, signalling steady momentum into 2026 despite this week’s interest rate rise announcement.

Data from Cotality’s Home Value Index, released on Monday, shows Canberra sustained 5.5% growth in real estate prices in the 12 months to the end of January, including 0.3% alone in January – which has been a traditionally quieter month.

It comes as Melbourne property saw a 5.4% boost to annual values and Sydney had annual growth of 6.4%, while Brisbane ran away with a rise of 15.7%.

The median dwelling price in Canberra is now $884,844. The median house price is now $1,033,761.

Windrose Property Principal and Sales Agent Sam McGregor said strong sales in the lead-up to Christmas and the continued steady pace of growth in Canberra in the new year were promising signs for the year ahead.

“I sold eight properties in December and it was a 2.5 week business month,” Sam said.

“We’ve really only had the doors open for the last two weeks and there are buyers around. I’m now starting to see people want to buy and starting to see offers and the same kind of momentum we had at the end of last year.

“There still seems to be a lot of confidence around. I think people realise that we’re through the worst of it in terms of (interest rate) volatility, and they realise this is now part of the next cycle.”

The Cotality report shows Canberra home values are just 1.8% down on from the last peak in May 2022. Values have grown 26.7% in the past five years, and 5.4% since the first rate cut in February last year.

Sam believed it would take more than this week’s announcement by the Reserve Bank of Australia to lift the cash rate by 0.25 percentage points to 3.85% to take the wind out of the sails of the Canberra market.

“Employment figures are stronger than expected and inflation is higher than expected. It’s clear the RBA really want to get in front of these indicators rather than lag and have to play catch up later. It’s a prudent approach,” he said.

“I don’t think one interest rate rise is going to dramatically impact the market, given the majority of what is selling at the moment is first homebuyer stock up to $1 million, driven by the Home Guarantee Scheme.

“The biggest impact that this rise will have is that it will take away about $50,000 from the average couple’s borrowing capacity, which will be significant for first homebuyers because they probably won’t be able to over-extend themselves.

“The average couple wanting to break into the market right now are looking to spend $900,000 to $950,000 to get a nice freestanding first home. It may impact the very top of the first homebuyer market and probably not a lot else.”

Sam expected this year’s market to be driven by first-time owners who now want to upgrade.
“The important thing is a lot of the money we will see coming into the market this year will be from people who are selling first homes and upgrading to four bedroom, two bathroom, nice block at $1.2 million.

“The interest rate movement probably isn’t going to dramatically negatively affect the market – maybe a little bit of confidence but all-in-all the bottom’s not going to fall out of the market.”

Cotality Research Director Tim Lawless said despite unaffordable conditions in many cities, cost of living pressures and the interest rate rise, Australia was still seeing a “broad-based rise in housing values”.

“The ongoing capital gains reflect persistently low inventory in the face of above average housing demand, however we are likely to see demand side pressures gradually ease in 2026,” Tim said.

“This trend of stronger growth conditions at lower price points is supported by intense competition for more affordable houses. This is where first home buyers, investors and, progressively, mainstream demand is most concentrated.”