Is the Canberra property boom back? House prices hit highest level in two years

The Australian housing market closed out 2025 with undeniable momentum. Across the nation’s capital cities, prices climbed to fresh milestones, fuelled by improved borrowing capacity, a resilient labour market and a chronic shortage of housing supply.

However, nowhere is the complexity of this recovery more evident than in Canberra, where the market has split into a distinct “two-speed” economy.

The Domain House Price Report for the December 2025 quarter reveals that Canberra’s detached house market is officially in high gear. House prices surged by 3.6 per cent over the quarter – an increase of roughly $39,309 – pushing the median to $1.14 million. This marks the highest price point for the capital since the market’s historic peak in June 2022.

According to Domain chief of research and economics Dr Nicola Powell, this isn’t just a flash in the pan. Canberra houses have now recorded three consecutive quarters of growth, marking the longest uninterrupted stretch of gains in four years.

“Quarterly growth accelerated to its strongest pace in more than two years, lifting annual growth to 6.1 per cent,” Powell says. “With prices now just 2.8 per cent below their previous peak, Canberra’s house market recovery is firmly underway and on track to reach record highs in 2026.”

While the national story is one of widespread gains, Powell explains that the upswing is no longer uniform. Affordability is increasingly dictating the pace.

Units are outperforming houses in Sydney, Melbourne and Brisbane as buyers seek relative value, while the smaller capitals such as Canberra, Adelaide, Perth and Hobart are seeing houses lead the charge. In the ACT, the appetite for land and space currently far outstrips demand for high-density living.

In a stark contrast to the booming house sector, Canberra was the only capital city in Australia to record a decline in unit prices over the December quarter. Apartment values dipped 1.3 per cent to a median of $611,466 – the weakest annual outcome in 15 months.

This divergence has created a historic price gap. A free-standing house in the capital now costs 86 per cent more than a unit, a three-year high.

“Houses have now outperformed units for a second consecutive quarter in the ACT,” Powell says. “This highlights a two-speed market in which demand for detached housing is recovering far more quickly than demand for units.”

Zac Morris of My Morris suggests this unit suppression is a natural byproduct of the city’s recent construction boom.

“The suppression of unit prices is due to a very large supply, especially one or two-bedroom apartments,” he says. “In Belconnen and Gungahlin, we’ve all seen new skyrises go up over the past five years. There’s still demand, but it takes time for it to catch up to supply.”

The resilience of the $1.14 million median is being supported by more than just local demand. Morris points to a “cumulative impact” of the interest rate cuts that trickled through 2025, which have finally had enough time to flow on to buyer borrowing power.

Additionally, the federal government’s Home Guarantee Scheme, which was expanded in October last year, is beginning to move the needle.

“I think there’s been a pressure across the market from the scheme and we’re just starting to see the impact,” he says.

While the higher end of the market has shown a slight “bounce back,” the most intense activity remains in the sub-$1 million sector. This is where “smart money” and first-home buyers are clashing over the few remaining affordable free-standing homes.

Looking ahead, the focus is shifting to Canberra’s established suburbs, where value remains. Morris believes the low to mid-range of the market – specifically in Tuggeranong, Weston Creek, and parts of Belconnen – will be the star performers.

“Kambah has all the metrics for strong growth and has already achieved a lot over the past few years,” he says. “I think other suburbs that are going to see similar results will be Rivett, Holder and Fisher in the Belconnen region. This is where it’s still relatively affordable for a quarter acre block and a liveable free-standing home.”

Despite the record-approaching medians, the market of 2026 is far removed from the “buy at any cost” frenzy of the pandemic era. Buyers remain highly price-sensitive and discerning.

“Preparing strong marketing campaigns will still make a big difference,” Morris says. “During Covid, buyers were purchasing properties regardless of their presentation, but that’s not going to be the case in 2026.”

Powell echoed this sentiment of cautious optimism.

“Growth remains widespread, yet increasingly uneven, with local affordability constraints, supply shortages and buyer behaviour determining the pace of price gains,” she says.

“Prices are expected to continue rising into the new year, though higher interest rates are likely to slow momentum and lead to markedly different growth rates and durability across cities and property types.”