Momentum is building in Canberra’s detached house market as prices rose again in October, driven by the Commonwealth’s 5 percent deposit scheme for first-home buyers. According to Cotality’s latest Home Value Index, house prices increased by 0.7 percent in October, contributing to a 3.6 percent rise for the year and 3.4 percent over the past 12 months.
In stark contrast, unit and townhouse prices have remained largely stagnant, with a negligible 0.1 percent increase over the month. This year, they have only risen by 0.3 percent, reflecting a stable supply of stock in the market. However, the influx of new buyers in the sub-million-dollar range, combined with a limited number of properties, is pushing house prices upward. Across all property types, Canberra prices saw a 0.6 percent increase.
Regional Disparities in Price Growth
The annual price growth figures reveal a significant north-south divide in Canberra. The burgeoning Molonglo region leads with a 6.8 percent increase, buoyed by new stock. Tuggeranong follows with a 4.7 percent rise, trailed by Weston Creek at 4.4 percent and a resurgent South Canberra at 4.3 percent. Meanwhile, North Canberra lags behind with a modest 0.9 percent growth, followed by Gungahlin at 2.1 percent and Belconnen at 3.6 percent.
Real estate agents report bustling open homes in Tuggeranong, where buyers are drawn to the value of standalone family houses. A notable sale in Macarthur set a suburb record at $1,755,000 for a four-bedroom, three-bathroom home with expansive living areas and a pool, held by the same family since 1991.
Expert Insights and Market Dynamics
Will Honey from The Property Collective noted increased buyer activity in October, particularly in the under $1 million range, with much of this interest concentrated in Tuggeranong. “That million dollars property price range is getting lots of interest,” he said. “We’ve had a really busy October.”
Honey highlighted a notable uptick in the number of visitors at open homes this spring, especially in the lower price range. “There are still properties moving above that, but most of the activity is in that range,” he added. While the unit market is moving more slowly, established apartments remain significantly cheaper than new ones, driving sales in that segment.
Cotality’s research director, Tim Lawless, emphasized the stronger price growth in Tuggeranong and Molonglo compared to the broader Canberra average. “You have to point towards the affordability of those markets as the attractor,” he said. First-home buyers, armed with the new deposit scheme, are flocking to these areas, but Lawless cautions that this window may not remain open for long as prices continue to rise.
“Canberra is relatively under-represented in terms of the proportion of suburbs with a median house value under $1 million, at just 37 percent,” Lawless noted. “That’s the second lowest of any region around the country after Darwin.”
Challenges and Future Outlook
The limited stock exacerbates the situation, with house listings 21 percent below average for this time of year, whereas unit listings are 14 percent above average. All of the nation’s capitals experienced price rises as demand outstripped supply.
However, recent economic developments pose challenges. Last week’s inflation shock and the dashed hopes for further interest rate cuts have cast a shadow over the market. “It’s not just the fact that it looks like we’re either at or approaching the bottom of the rate-cutting cycle, but also just the impact on sentiment and confidence,” Lawless said.
“Cost of living pressures have bounced back. I think that in itself is probably going to dent confidence,” he added.
If interest rates remain on hold, their impact diminishes as rising housing prices dilute the effect of stronger borrowing capacity. The coming months will be crucial in determining whether the current momentum in Canberra’s housing market can be sustained amidst these economic headwinds.
