It’s June 2000, and you’re looking to buy a house in Canberra. The median price is $191,511 and if you meet the profile of the average Canberra resident, you have a gross household income of $1876 per week.
Fast forward to today. If you’re looking to buy a house in Canberra, the median house price has grown by almost four times that of 2000 and currently sits at $749,865. In the same period, the gross household income hasn’t even doubled with the latest ABS figures putting it at $2419 per week.
“House prices have certainly out-priced wages growth and that’s certainly not a surprise in the current environment where we have seen such slow wages growth, but the property types in Canberra have changed over the past two decades and we are starting to see a more diverse array of housing,” said Domain chief data scientist Dr Nicola Powell.
Over the past 18 years, Canberra’s house price has consistently grown with a decline in only six quarters, according to Domain Group data.
The strongest period of house growth was between the June 2000 quarter to the June 2004 quarter, where year-on-year growth did not drop below double digits.
“Around the time of the [Sydney] Olympics there seemed to be a huge jump in growth and properties started to double and triple in price.”
In the four years from 2000 to 2004, Canberra’s median house price more than doubled, increasing by a staggering $200,539.
In the September 2003 quarter prices jumped 28.9 per cent annually – this was the strongest growth over the 18 years.
“In 2003-04 there was a confidence in the market that it was lacking previously,” said Mr O’Brien.
The pace of growth started to slow in late 2004, with a decline in the June 2005 quarter.
“We had gone through a period of really strong economic growth with the federal government announcing surpluses every year, everybody felt really good about where the country was heading,” said Sadil Quinlan director Greg Sadil.
“However, political instability arose and there started to be talk of cutbacks in the public service … people were starting to get nervous about job security.”
Mr Sadil said the Canberra market was very influenced by happenings in the federal government and would respond quicker to “problems or perceived problems”.
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Between late 2005 to mid-2008 there was a period of solid growth, but the pace slowed and declines were recorded in the December 2008 and March 2009 quarter.
Mr Sadil attributed this decline to the global financial crisis, and said the strong growth from late 2009 to early 2011 was due to government responses to the GFC.
“Around the GFC period the market was down everywhere, but between 2009-11 government initiatives added stimulus to the market and there were lower interest rates,” he said.
Currently, house prices have been on the rise in Canberra since the June 2013 quarter but it hasn’t been at the levels experienced in the early 2000s.
In the past five years, the highest level of annual growth was recorded in the March 2017 quarter with a year-on-year increase in the median price of 10.3 per cent. This was also the first time Canberra’s median surpassed $700,000.
Mr Sadil said Mr Fluffy blocks have played a big part over this time.
“Vendors of Mr Fluffy blocks were forced out of their homes and were looking for alternatives. They pushed up prices because they were competing with each other,” he said.
“When the Mr Fluffy blocks were coming onto the market, they were being sold at a premium and that flowed through to the established market.”
Dr Powell said the pace of growth was starting to slow.
“The pace of growth has been slowing and that’s really driven by policy changes, such as tighter lending conditions meaning fewer investors,” she said.
So what’s next for Canberra?
“All I can say is growth can’t go on forever, it’s impossible. Markets rise and fall, we’ve had 18 years of a strong market despite a few glitches and there will be some glitches in the future,” said Mr Sadil.
“You just don’t know when.”