After a period of significant growth Canberra unit values have fallen slightly, while house values in the capital have seen an even larger decline.
CoreLogic's July home value index recorded a modest 0.2 per cent decline in Canberra unit values, with the median value now sitting at $626,128.
House values dropped by 1.4 per cent for the month to a median of $1,047,912. It marks the sharpest decline in housing values for Canberra after nearly three years of growth.
Canberra also reported its first quarterly decline in house values, down 1.5 per cent for the three months to the end of July.
Dwelling values - combining houses and units - fell 1.1 per cent for the month and were down 0.9 per cent for the quarter.
National dwelling values fell 1.3 per cent in July, which marks the third consecutive month of the housing downturn.
The fall in Canberra's housing values comes after an initial decline in May followed by a slight correction in June.
CoreLogic research director Tim Lawless said recent interest rate rises have had an obvious impact on housing market conditions.
"The rate of growth in housing values was slowing well before interest rates started to rise, however, it's abundantly clear markets have weakened quite sharply since the first rate rise on May 5," he said.
Mr Lawless said the rate of decline is comparable with the onset of the global financial crisis in 2008.
"In Sydney, where the downturn has been particularly accelerated, we are seeing the sharpest value falls in almost 40 years," he said.
The national decline in dwelling values was led by Sydney and Melbourne where values fell 2.2 per cent and 1.5 per cent respectively during July.
Brisbane recorded its first decline since August 2020, with dwelling values down 0.8 per cent, while Canberra posted a 1.1 per cent decline and Hobart saw a 1.5 per cent drop.
Perth, Adelaide and Darwin recorded positive growth in July, but the capitals have each seen a sharp slowdown in growth since the first interest rate hike in May.
Rental yields recovering
With rents trending higher through July and vacancy as low as 1 per cent in some parts of Australia, yields are consistently improving, albeit from record lows, Mr Lawless said.
Across the combined capital cities, gross rental yields increased from a record low of 2.96 per cent in February 2022 to 3.20 per cent in July.
Canberra's gross rental yield remained steady at 3.8 per cent.
"Such tight rental markets, improving yields and stronger buying conditions should help to keep a floor under investment demand," Mr Lawless said.
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