Canberra is expecting to see a greater rise in house prices over the next three years than any other Australian capital city, according to a new QBE report.
House prices in Canberra are predicted to increase 16 per cent by June 2020.
Hobart will see the next biggest increase at 10.8 per cent, while house prices in Sydney and Darwin are expected to drop, down 0.2 per cent and 0.9 per cent respectively.
The Australian Housing Outlook Report predicts a median house price in Canberra of $750,000 by June 2020. The current median price is $645,000, according to QBE. The latest figures from ACT Treasury show a median price of $677,500 for houses and $455,000 for units in August.
QBE lenders’ mortgage insurance chief executive Phil White said the key driver for an increase in house prices in Canberra had been population growth.
“This year we’ve seen net interstate migration into Canberra, coupled with international migration,” Mr White said.
While Canberra had plenty of medium and high density units and apartments in Canberra, including ones in construction, this was at the expense of stand-alone houses, he said.
“On the supply side, Canberra has been building units – it has the highest proportion of units compared to houses of any of the capital cities,” he said. “With the extra demand in there for housing, there’s a bit of an undersupply [in houses].”
Unit prices in Canberra are also expected to rise, but at a rate that Mr White said might be slower than the increase in household income, meaning an overall improvement in affordability.
Only Adelaide and Hobart were also expected to see an increase in unit prices – every other capital city would see a drop, according to QBE.
As house prices increased, more people would look to medium and high density living, Mr White said.
“Those choosing to live in units will see an improvement in affordability.
“One of the callouts of the report is that the great Australian dream of home ownership is changing. Where people once aspired to a quarter acre block with the hills-hoist and the pool, it’s now much more likely to be an aspiration to own a unit or apartment closer to the cities where most of us are working.”
The Housing Outlook Report supports forecasts made last week by SQM managing director Louis Christopher in his Housing Boom and Bust Report 2017. Mr Christopher predicted 5 to 9 per cent increases in the Canberra market in 2018.