Canberra's housing market has reached a new milestone, with the median house price hitting a record high of $1.05 million. According to the latest Domain House Price Report, the city's property market is experiencing a two-speed dynamic, with houses outperforming units significantly.
Record High for Houses
The June quarter saw Canberra's median house price rise by 2.4 per cent to $1,053,000, surpassing the previous record set in the March quarter. This marks a 9.1 per cent increase year-on-year, making Canberra one of the strongest capital city markets in Australia. The surge in house prices is driven by low interest rates, strong demand, and limited supply, particularly in sought-after suburbs.
Units Lag Behind
In contrast, the unit market in Canberra has struggled to keep pace. The median unit price remained flat at $496,000, reflecting a 0.2 per cent decline over the quarter. Year-on-year, unit prices have risen by just 1.5 per cent, highlighting a clear divergence between the two segments. Domain economist Dr. Nicola Powell noted that the two-speed market is a result of changing buyer preferences, with more people seeking larger homes with outdoor space due to the pandemic.
Factors Driving the Two-Speed Market
Several factors contribute to this divide. Firstly, the shift towards remote work has increased demand for houses with home offices and gardens. Secondly, low borrowing costs have enabled buyers to stretch their budgets for detached homes. Additionally, first-home buyers are increasingly turning to units as an affordable entry point, but this has not been enough to lift prices significantly. The report also highlighted that Canberra's strong public sector employment provides a stable economic base, supporting housing demand.
Suburb Performance
Some suburbs have seen exceptional growth. For instance, the median house price in the inner south rose by 11.3 per cent to $1.7 million, while the inner north saw a 7.8 per cent increase to $1.4 million. In contrast, unit prices in these areas have remained relatively stagnant. The report suggests that the two-speed trend is likely to continue, with houses maintaining their premium over units.
Outlook for the Market
Looking ahead, the market is expected to remain strong for houses, driven by ongoing demand and limited supply. However, affordability constraints may eventually slow growth. For units, the outlook is more subdued, with potential for price declines if investor activity remains low. The report concludes that Canberra's property market is likely to remain a seller's market for houses, while units may offer opportunities for buyers seeking value.
