6 Key Trends Affecting Canberra’s Red Hot Property Market

Since the start of the COVID-19 pandemic, Canberra’s property prices have jumped an eye-watering 38%, achieving the highest growth across Australia’s capital cities. Here are six key trends affecting Canberra’s hotly contended property market right now.

Prices On The Rise

Canberra’s house prices have skyrocketed 32.5% over the past 12 months, to reach a new median record of $1.074 million, according to Domain’s September 2021 House Price Report. The Australian capital is now the second most expensive city in the country, just behind Sydney and ahead of Melbourne, for the first time since 2005. Low stock and record low interest rates mean that properties are selling at a rapid rate, reflecting the steepest price acceleration in three decades. Canberra’s labour market has also remained steady throughout the pandemic, with many locals employed within the public sector on relatively high incomes, further fuelling price growth.

People In Motion

The pandemic has set many Australians in motion, as people are able to work remotely and are prioritising larger homes (both in the short and long term) in lifestyle-centric locations. Interstate migration combined with an ongoing shortage of properties available to purchase is putting upward pressure on house values across the country. A lack in international travel options has paved the way for a boom in regional opportunities. Investors are eyeing Canberra for its accommodation and short-term rental market, which continues to top charts as one of Australia’s best performing cities.

A Sellers’ Market

Buyer demand remains well ahead of supply in Canberra as reflected in the city’s exceptionally strong auction market. Clearance rates have remained above 80% for each month this year, hitting 89% in September, as buyers continue to operate in a sellers’ market. Premium properties are leading the pack in terms of growth, with median house prices in the inner north, inner south and Woden Valley skyrocketing. The city is seeing more sales tipping $1 million than ever before.

First Home Buyers

While the housing market remains red hot, unit prices have not experienced the same level of growth, making this a good time for first-home buyers to jump in. The media unit price now sits just under $490,000, which is relatively affordable when compared to Sydney’s median unit price of $802,000. First home buyers may also be eligible for stamp duty concessions – up to $35,910 – or to pay no duty at all, depending on the total gross income and number of dependent children (if any). This is a significant saving for those looking to enter the market.

Rental Supply

Canberra’s rental prices have also surged to record highs, making it the most expensive capital city for renters in Australia. According to CoreLogic’s Quarterly Rental Review, the median rental cost is now $633 per week, increasing $30 over the quarter and $60 over the past year, with inner-city Campbell and Deakin proving the most expensive suburbs for tenants. The rental market has become increasingly competitive, with supply seeing a sharp decline during the pandemic equating to a vacancy rate of just 0.7%.

Discrepancy In Cost of Apartments

The price difference between buying a unit or a house in Canberra is at an all-time high, trailing only behind that of Sydney. According to Domain, Canberra’s unit prices dropped 2.6% over the past year, creating a record gap between the two markets. The HomeBuilder Grant (now closed) coupled with a greater desire for extra space and a backyard, has made standalone houses the preferred option among buyers. That being said, in sought-after suburbs such as Barton and Braddon, unit prices have jumped a whopping 28.8% and 15.3% respectively over the past year. Yarralumla became the first suburb where units hit a median sale price of more than $1 million.