Canberra house price results mixed as election and possible rate cut loom

Canberra house prices fell by 1.4 per cent over the March quarter following five consecutive quarterly price rises.

Canberra’s suburban regions reported mixed results with some continuing to record positive prices growth. House prices in Weston Creek increased by 2.1 per cent over the March quarter for the best result of all the regions with next highest – Canberra Central – up by 0.9 per cent.

All other regions recorded falling house prices with Tuggeranong down 1.0 per cent, Belconnen 2.2 per cent, Gungahlin 4.4 per cent and Woden Valley where house prices decreased by 4.5 per cent over the March quarter.

House prices in Canberra Central recorded the highest increase over the year ending the March quarter – rising by 7.2 per cent. Next highest was Gungahlin up 6.5 per cent, Weston Creek 5.3 per cent, Belconnen 3.3 per cent, Woden Valley 1.4 per cent and Tuggeranong where house prices rose by just 0.7 per cent over the past year.

Falling Canberra house prices over the March quarter followed the national capital city trend with only Melbourne and Hobart recording growth.

All eyes will be on the federal budget announcement next week, with the Canberra housing market particularly sensitive to the outcome in regard to possible public sector job cuts.

Tuesday’s budget announcement will coincide with the monthly decision on official interest rate settings from the Reserve Bank. Although most likely to remain on hold for the 12th consecutive month, the case is clearly growing for a near-term cut.

The peak of the home building cycle appears to have passed and the trend for retail sales is also falling. The dollar remains too high and concerns about overheating housing markets are now clearly fanciful with Sydney house prices falling sharply over the past six months.

Although the jobless rate has improved recently this measure tends to be a lagging indicator of economic health and recent improvements have largely come from increases in part-time work.

The Reserve Bank may decide on a pre-emptive strike to support a weakening economy before the banks act unilaterally to raise rates and also before the distractions of the forthcoming election campaign which will certainly begin in earnest following the budget announcement.

Dr Andrew Wilson is Domain Group chief economist. Twitter: @DocAndrewWilson – My Property 2UE, Fridays 2-3pm, Saturdays 12.30-1pm.