Australia’s capital has defied public sector concerns to record its highest median price for houses
The ACT has always had a dense property market, devoid of the extremes of the state surrounding it – NSW – which blends multi-million dollar properties around city beach suburbs with dirt cheap sheds out back of nowhere.
Canberra is as thick in the middle as a snake after lunch, so when its medians rise to never-before-seen levels, you know it has been a prosperous month.
“The ACT has been the superstar of the quarter for us,” says Andrew Wilson, senior economist at Australian Property Monitors (APM). “It’s been up 1.1%, but it has also reached its record median house price.”
Canberra was the best capital for consistent growth across house and unit markets, according to APM.
All the other cities are still below their peaks. Sydney is about 1% below, Melbourne around 4–5% below, but Canberra has now recorded its highest ever median house price. It has broken free into the next price cycle, so it has gone past the previous peak and definitively out of the trough.
Wilson says the result should not come as a surprise, when considering the numbers.
“It has a similar level of unemployment as Perth, and relatively high wages driven by a strong public sector,” he says. “It’s a very dense market in terms of where its median is, and that means there’s always pressure on prices, particularly given that people have the capacity there to buy. There’s not a real top end to the market as there is in Melbourne and Sydney, but by the same token, there’s not a real low end either.”
Short supply
Wilson says the upward pressure on prices is likely to continue until demand is met with supply.
“Canberra has a lot of problems with land release and properties for first homebuyers,” Wilson says. “They have ballots and other various mechanisms they’ve used to try and distribute that equitably, and this just reflects the underlying constraint that the market has. It’s always going to be strong in the middle, because of high competition for properties that are scarce.”
The pressure looks like being reinforced, with the latest Australian Bureau of Statistics data showing that the ACT joined Victoria in recording falls in new dwelling approvals for the month. Melbourne approvals fell by more than 14% while Canberra recorded a 2.5% drop.
Soldiering on
Deloitte Access Economics reported that growth in the ACT has to date managed to shrug off public sector layoffs and cooling housing construction. However, the report warns that the worst may still be to come.
“The ACT’s growth in recent years relied on two big engines: a federal government willing to spend to help defend Australia against a global downturn and a local housing construction sector which had its biggest boom in many years,” the report says. “Both those props to growth have been undermined for a while now. Growth slowed in the last 18 months as the federal purse strings tightened and the housing construction sector finally paused for breath.”
