Canberra house prices extend slide as Reserve Bank rate rise looms

Canberra’s house market is facing fresh pressure as the Reserve Bank is expected to lift interest rates again on Tuesday, adding to a run of falls that has already pulled the territory’s median house price down 5.7 per cent this year, Region Canberra reports.

Cotality research director Tim Lawless told the outlet four rate rises have already weighed on demand this cycle, with another expected on Tuesday. Canberra’s median house price sits at $984,000, with units and townhouses at $586,500 and the combined dwelling median at $844,000.

Why it matters

A further rate rise lands on a market that is already softening. Cotality figures reported by Region Canberra show Canberra house values fell 1 per cent in October alone, and are down 3.7 per cent over the quarter. Nationally, dwelling values fell 1.2 per cent in October, the seventh straight monthly fall, leaving the index 6.7 per cent below its March peak. For Canberra developers and agents, where blocks are held under Crown lease, falling values and a fifth rate rise this cycle would mean lease variation and new-block releases carry higher financing costs and softer buyer demand.

Tim Lawless, research director at Cotality, is quoted by Region Canberra saying: “Affordability and serviceability constraints were the earliest factors weighing on housing demand.” Will Honey of The Property Collective told the outlet that parts of the Canberra market are softening and that buyers who act now have an edge over those waiting for prices to fall further. Earlier coverage looked at the urban growth boundary’s pull on territory prices.

The numbers

Canberra houses are down 4.2 per cent over the past year on Cotality’s figures, with unit and townhouse values down 2.3 per cent. District falls over 12 months reported by the outlet include Woden down 5.7 per cent, South Canberra down 5.1 per cent and Gungahlin down 3.4 per cent, with Tuggeranong the most resilient at down 1.7 per cent. Nationally, the combined capitals index is down 8.1 per cent in seven months, and the 6.7 per cent national fall equals about $63,400 off the median Australian dwelling. Region Canberra also reports auction clearance rates running below last spring’s levels, with more properties passing in or being withdrawn from sale.

What’s next

Tuesday’s rate decision will test whether Canberra’s slide deepens. A further rise would add to the serviceability pressure Lawless named among the earliest drags on demand, while Honey says buyers are better placed acting now than waiting. Financing costs on new builds and lease variations are likely to stay elevated given the run of rises already recorded this cycle.