Canberra house prices fall 2.5%: Is a deeper slump coming?

House and unit prices have both dropped 2.5 per cent in Canberra over the last quarter, with some experts predicting an even deeper slump on the cards.

In what’s already been the weakest result in three years, houses lost an average of $26,610 in value in the past three months alone to a fresh median of $1.038 million, according to the latest Domain House Price Report, nearly $39,000 below the June 2022 peak.

Units, meanwhile, chalked up their poorest quarterly result in 15 months, falling $13,516 to a median of $523,265, with annual growth slowing to 1.2 per cent.

And while lower prices may present fewer barriers to entry for first home buyers and upgraders, some in the industry are warning property owners to brace for more change.

The new president of the Real Estate Institute of the ACT, Chris Wilson, believes the current market to be in its most challenging condition in three decades. Back then he says it was cuts to the public service by former prime minister John Howard in 1996 that created a downturn. This time he attributes the fall to both local and federal government changes to tax settings, which he says have seen investors leave the market, or become more cautious about entry.

“We’ve seen buyers lose confidence, especially over the $1 million mark, investors simply not looking any more, first-home buyers nervous and many others … offloading their properties.”

Wilson says prices could fall more if more owners and investors are forced into selling their properties as a result of changes to taxation laws.

After so many years of price growth following COVID, the downturn has meant Canberra is now solidly a buyers’ market, with purchasers being able to be picky about property, and demanding any necessary repairs before they commit.

Sellers, on the other hand, are having to present their houses and units as well as they can, be realistic about price and be prepared to negotiate to secure deals.

Rick Meir from agency home.byholly, works as a team with wife Tina, says the situation will probably get worse before it improves, with more stock currently coming onto the market that will have a further dampening effect on price.

“We’re finding that agents have to give sellers a realistic idea of what their property is worth based on very recent sales so as not to inflate their expectations,” he says.

“Those that don’t are seeing properties not moving as there’s just not that depth of buyers now.

“But the beauty is if you’re selling and buying in the same market, then all ships rise or fall on the same tide so you can sell and buy well.”

One of the Meirs’ recent sales was an immaculately renovated property at 8 Dixon Drive, Holder, with a price guide of $1.2 million, which sold for $1,296,000 after two first home buyers became involved in a bidding war.

$1,296,000

8 Dixon Drive, Holder ACT 2611

4

2

4

View property

“But the message to buyers is, if you want to buy, buy now!” says Brett Hayman, the principal of Hayman Partners. “It doesn’t get much better than this. We’re just seeing the level of buyers dry up, and we’re doing open homes, and no one’s coming through.

“We’ve had the perfect storm of rising interest rates, government spending, inflation, higher cost of living and then the tax reforms on top of that. The government couldn’t have done worse for the market if they’d tried.”

Jess Smith, the principal of Stone Real Estate Gungahlin, agrees that this market does offer fantastic buying opportunities.

“It’s certainly not as competitive as it was earlier in the year,” she says. “But when homes are moving-ready and appealing, we’re also getting some good results for sellers.

“If they’ve updated the property and have given it fresh paint and new carpet and the home is in good condition generally, and not needing much work, then we can receive multiple offers, and it’s not as bad as some make out.”