Spring season to bring welcome energy to Canberra real estate

The traditionally busy spring property season could bring a welcome lift to Canberra’s real estate market, as new data shows the city endured a further downswing in values in August.

CoreLogic’s latest Hedonic Home Value Index, released on September 1, shows values for Canberra real estate fell by 1.7% in August, but overall property prices were still 7.8% higher for the past year.

The decline is in sync with almost all Australian capital cities, except Darwin, which was the only city to experience positive price growth in August with a 0.9% boost to values.

The most pronounced fall was in Sydney where property prices tumbled by 2.3% in the month and Brisbane, which suffered a 1.8% drop.

The median dwelling price in Canberra is now $909,748 – down from $925,973 in July.

But Canberra’s rental prices remained strong, with 8.6% growth in rents raised for houses in the past year and a 7.3% increase for units and apartments. The rental yield is now at 3.9%, slightly above the national average of 3.5%.

MARQ partner and licensed agent Craig Chapman said despite another monthly dip in property values, low auction clearance rates and the threat of further interest rate rises, the market was dynamic and most properties were selling.

Both buyers and sellers needed to be realistic and respond to the market conditions by acknowledging Canberra’s unexpected strong growth during the COVID pandemic, he said.

“At the end of the day, most vendors are still ahead when it comes to growth,” Craig said.

“If you are a genuine buyer, my advice is buy now. We are likely to see ongoing falls in property values at least for the next few months.”

Craig said listing numbers were already increasing with the onset of the spring season, and this would open up more opportunities for buyers in the already tight market.

“We are selling everything. Our days on market haven’t changed,” he said.

“Stock levels are light but they are growing. We are coming out of winter and going into spring so we’re expecting buyers to have a lot more choice, which could impact on prices a little further, but there is still heavy competition.

“There are still a lot of positives. At the end of the day, the market is dynamic, it’s organic, it rises and falls – and within micro-pockets it can rise and fall within weeks.

“The good news story for Canberra is that our ‘correction’ has been more mild than our larger counterparts in Sydney and Melbourne. I would expect that we would have seen the full correction by Christmas.”

Nationally, CoreLogic estimates the number of home sales over the three months to August was -14.8% below the same period a year ago, but larger declines were evident across some cities including Sydney (-35.4%), Canberra (-18.9%) and Melbourne (-16.5%).

CoreLogic research director Tim Lawless expected the number of listings would climb in spring, but activity may not be as frenetic as previous spring seasons.

“Between winter and spring, we typically see a 22% rise in the number of new capital city listings based on the pre-COVID five-year average,” Mr Lawless said.

“The flow of new listings this spring season may not be quite as active with the housing downturn dissuading some prospective vendors, but we are likely to see more listings added to the market than in winter.”

Mr Lawless expected the downturn would continue to play out through the remainder of the year, and possibly into 2023.

“It’s hard to see housing prices stabilising until interest rates find a ceiling and consumer sentiment starts to improve,” he said.

“From current levels, interest rates are likely to increase by at least another 75 basis points and there is a good chance advertised stock levels will accumulate through the spring selling season, providing more choice for buyers and adding further downwards pressure on housing values.”