Canberra housing market surges, but hope for buyers on horizon

The new data from CoreLogic also suggests growth in capital city home values outpaced the regional markets last month.

The growth in house prices continues to outpace units in the ACT. House prices were up 2.1 per cent in the month, and the median value was $852,398. Units were up 0.5 per cent, and the median value was $500,675.

CoreLogic said recently in its quarterly review that the ACT housing market was surging. May was the 21^st consecutive month that house prices grew in the territory.

"The extremely strong growth in demand for dwellings across the ACT, like many smaller capital cities and regional markets, has been exacerbated by low listings volumes. Total stock on the market as of 23rd May were 23.9 per cent below the five-year average, with just 1631 properties available for sale in the region," it said.

It noted 613 of those listings had been added in May, "days, suggesting new listings volumes are rising and may eventually ease conditions for buyers in the Canberra market".

Demand for detached houses could be constrained by affordability pressures, where the house price to income ratio for the ACT was recorded at 6.1 through the September 2020 quarter, compared with 3.8 across units. However, given there are still sustained price increases across the Sydney market, where the house price to income ratio was 9.8 in the same period, suggests it will be some time before this affordability constraint materialises," the quarterly report said.

In Tuesday's monthly report, capital city prices rose 2.3 per cent on average in May, compared with a 2 per cent rise in the regions, bucking the annual trend of regional prices surging ahead.

Thought to have been a result of people working remotely and spending on holiday homes, the report suggests the treechange and seachange tides may have changed.

While Canberra's May result was slightly down from 1.9 per cent last month, a 15.6 per cent annual increase puts it ahead of all capitals except Hobart and Darwin.

Sydney's house prices are once again rising the fastest, despite a lower 13.9 per cent annual gain.

The weakest housing markets over the past year have been in regional Western Australia and Melbourne, where the extended lockdown has created a significant drag on growth, the report has found.

CoreLogic researcher Tim Lawless said the underlying trends had shifted over the past year.

"The most expensive end of the market is now driving the highest rate of price appreciation across most of the capital cities, whereas early in the growth cycle it was the most affordable end of the market that was the strongest," Mr Lawless said.

"From a geographic perspective, it was the smaller capital cities that led the housing market out of the COVID slump, but now Sydney has risen through the ranks to record the largest capital gain over the past three months with values up 9.3 per cent."

Housing markets around Australia rose more in May than April, with the upper quartile of the housing market driving the highest rate of gains in all cities.

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With both house and unit values lifting across the board, Mr Lawless said the upswing across Australian cities was a rarity.

He said a shortage of supply and increase in demand continued to drive the trend.

"For every new listing there is more than one sale occurring," said Mr Lawless.

"As a consequence, vendors remain in a strong selling position while buyers have a weak position at the negotiation table."

With sales continuing to outpace new listings across the country, the total number of homes advertised for sale remained approximately 24 per cent below the five-year average.

Melbourne is the only capital where listing numbers are now higher than the five-year average.

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