Canberra bucks national trend with house prices set to rise: report

Canberra’s characteristic slow-and-steady house price growth will pay off during the next few years as the nation’s capital is on track to be one of Australia’s top performers, according to BIS Shrapnel.

BIS Shrapnel’s Residential Property Prospects, 2016 to 2019 report was released on Monday. The company predicts most capital cities will see median house prices decline, with just Brisbane, Canberra and Hobart set to record modest price growth.

Canberra’s median house price is forecast to rise by a total of six per cent over the three years to June, 2019. Brisbane and Hobart’s median house prices are expected to rise by a total of seven per cent in the same timeframe.

The ACT is estimated to have experienced a median house price rise of four per cent during the 2015/16 financial year to $595,000.

BIS Shrapnel senior manager and study author Angie Zigomanis said the impact of public service cuts appeared to be dissipating and there was a rise in interstate migration.

“Moreover, net overseas migration inflows have increased since bottoming in 2013/14, largely due to the recovery in overseas student growth that has coincided with the lower Australian dollar,” Ms Zigomanis said.

“Canberra also has the highest incomes of the capital cities and affordability is not as strained as in the other cities.”

Sydney and Melbourne house prices, which have seen strong growth in recent years, slowed during 2015/16. Prices are forecast to decline by about one per cent over the next three years.

Allhomes data analyst Nicola Powell said the Australian housing market is softening and Canberra is no exception, however the detached housing market is propping up the city’s overall performance.

“Housing values continue to strengthen as a result of demand,” Ms Powell said.

“Historically low interest rates have fuelled market activity. With further expected cuts it is likely to ignite demand further, putting an additional push on prices. Weak housing starts and the slow release of build-ready land has added fuel to house price growth.”

According to the report, median unit prices are expected to fall across all capital cities. Canberra, which experienced a four per cent decline in unit prices during the last financial year, is expected to drop another four per cent over the next three years.

“The strong supply pipeline of units and existing stock are weighing heavily on prices,” Ms Powell said.

“The unit market is expected to continue to fall, for the time being at a subdued rate, until the future developments hit the market putting further negative pressure on price.”