2021 was a runaway year for the property market nationwide, with long-held growth records being broken. While most major cities saw great growth, the graph was exponential for capital cities like Canberra.
The ABS reported a 23.7% increase in residential property prices in the eight capital cities during the 12-month period from Dec 20 to Dec 21. Canberra, with a 28.8% change in prices, was second only two Hobart, with a 29.8% change. In the Dec 2021 quarter, the number of residential households increased by 44,800 and the mean house price increased by $44,000. The highest increase in price was recorded in NSW, a rise of $47,700 to reach $1,207,200. With a mean price of $979,600, the ACT had the second highest increase.
There were several factors behind this performance of the Canberra property market. Firstly, the local economy proved to be robust enough to withstand the effects of the pandemic. Canberra ranked low on the unemployment chart among capital cities. Plus the stimulus payments helped the local economy stay afloat. Secondly, the interest rates continued to stay low and buyer confidence continued to stay high during the challenging period. Lastly, scarcity continued to be a supply and demand issue because of the housing shortage prevalent in the state.
So, based on last years performance and the new developments of 2022, how is the market in Canberra performing during 2022?
The 2021 market boom was an extraordinary event, so we can expect prices to fall after something like that. And, the market data for the year shows a slowdown compared to the previous year.
The latest market data on the Canberra property market from Domain.com.au shows a reversal in trend during the first three months of 2022. There was a 0.9% quarter-over-quarter (QoQ) decline in house prices in March 2022. This is the first time we have seen a drop in prices in Canberra since March 2020. The leading factor in this price is the premium price-point of the city’s housing market: the prices in the Inner South decreased by 1.9% during the quarter.
Currently, an influx of new listings coupled with affordability issues are main challenges for the property market nationwide. Some positive factors for the Canberra market include the return of overseas students, above-average salaries and a positive change in housing supply. The supply remains lower than the five-year March average, according to Domain.com.au, but we have seen the first annual increase in just over two years.
