Canberra's housing market can expect to maintain its million-dollar median over the next financial year, as house prices move into recovery following a turbulent 12 months for the capital.
The Domain Forecast Report FY24 predicts house prices in the ACT will grow by between 2 and 4 per cent in the next financial year, resulting in a median house price of between $1.058 million and $1.079 million.
These figures are in line with nationally predicted trends, with every other capital city expecting to see positive house price gains along with Canberra.
Despite sitting closely behind the leading capital cities, Canberra prices are expected to remain lower than during the June 2022 peak, when a median price of $1.17 million was achieved. This peak was short-lived, with house prices falling 10.9 per cent from the peak to March 2023.
Prices are expected to continue to fall into the June 2023 quarter before recovering in the back half of the financial year.
Domain chief of research and economics Dr Nicola Powell said Canberra could expect a more subdued rate of growth compared to larger markets.
"Canberra's property cycle isn't as far advanced as some of our other capital-city markets such as Sydney, which is leading the way in terms of recovery," Powell said.
"It is likely to find a price trough this quarter, and then move into recovery. So what we're going to see over the next financial year for the Canberra market is for house prices to move into that recovery phase."
Powell said several factors, such as buyer borrowing capacity, employment and population growth, are going to be major influences on the speed of recovery in the next 12 months.
"Borrowing capacity has been really stifled over the last 12 months, and that is going to slow down price recovery," she said. "We're not yet at the peak of interest rates; we're likely to see maybe one or two rate hikes from the RBA, so that is going to factor in.
"In the context of the overall economy, while Canberra does have a more diverse employment base, it does have a large government sector employment base, and generally speaking I'd say government sectors aren't really in expansion mode because of the economy."
While house prices are set to rise, unit prices in Canberra are predicted to remain volatile, with a forecasted value shift of minus one per cent to positive growth of 2 per cent expected.
Powell said this was the result of a better supply pipeline of apartments in the ACT and a preference for houses and land among Canberra buyers.
"Canberra in recent years has really been good at supplying apartments and high-rise developments to market compared to any other capital city," she said.
"It also really speaks volumes to preference. I think what we've seen during the pandemic is that people have arrived in Canberra and they want lifestyle, a better work-life balance and bang for buck - and Canberra can give that with larger block sizes."
While the report presented modest numbers, Shane Killalea of Hayman Partners said the Canberra market remained in a good place.
"This is very much a normal market that we're experiencing here at the moment," he said. "A lot of agents would have got into the industry two or three years ago with the best market in history - now it's just going to come back to that normal market we see year in, year out.
"Canberra is certainly in for a bright future, even if that growth is a little slower."
