Canberra house price boom over - ABC Online

Posted January 16, 2013 18:10:24

Canberra home owners are being warned that a decade-long explosion in house prices in the capital is over.

A new report by RP Data shows that while prices are still rising, they are well short of the lofty heights seen during the property boom of the late 1990s and early 2000s.

Between 1997 and 2002 house prices in the ACT were increasing by around 15 per cent every year.

But by 2007 the rate of increase had dropped to just below 10 per cent and has continued falling ever since, down to an average of just over 2 per cent in the past five years.

Part of the reason, according to the report author Cameron Kusher, is the preference of an inner city lifestyle for many buyers, as well as the affordability of units over houses.

In recent years, the growth in value of units has overtaken that of houses, growing at a national average of nearly 3 per cent.

"The global financial crisis [GFC], and the subsequent changes in consumer attitudes that it has led to, has largely impacted the results," Mr Kusher said.

"However, it remains difficult to argue that value growth would have been as strong over the past five years as the previous five years, even without the financial crisis."

Mr Kusher says the downturn is not surprising.

"Capital city home values have increased at a [national] average annual rate of just 1.9 per cent over the past five years," he said.

"[It is] reflective of changing consumer attitudes towards debt post-GFC."

But property owners hoping for a return to those glory days may face a long wait.

"As the cost of buying and selling continues to increase, albeit at a much slower pace, it seems unlikely that capital gains in the housing market will return to those levels enjoyed between 1997 and 2002," Mr Kusher said.

Nationally, Darwin's homes are recording the biggest growth, rising around four per cent each year since 2007.

But in the past five years, prices have been falling slightly in Hobart, Brisbane and Perth.

Topics: states-and-territories, urban-development-and-planning, act, canberra-2600