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Canberra home values drop by most of all capitals

Canberra Times logo Canberra Times 1/05/2014 Meredith Clisby
The home value index shows ACT Homes fell by 1.1 per cent in April. © Provided by Canberra Times The home value index shows ACT Homes fell by 1.1 per cent in April.

Canberra home values have dropped by the most of all capital cities amid a national housing market slowdown, new data shows.

The RP Data-Rismark April home value index shows the value of territory homes fell by 1.1 per cent over the month and grew by just 0.2 per cent over the quarter. 

This follows a stronger performance from the territory in March, when values increased by 2.2 per cent. 

According to the data, issued on Thursday, Canberra had the least growth of capital cities and was one of only two cities to record a fall in values. Melbourne recorded a 0.5 per cent decline over April.

Canberra houses fell 1.2 per cent for the month and units by 0.1 per cent. 

The RP Data-Rismark home value index shows Canberra home values have increased by the smallest amount in the country over the past year and have risen by just 1.2 per cent.

This is well below all other capital cities and more than 10 per cent less than the combined capital cities figure of 11.5 per cent.

The home value index shows dwelling values shifted down a gear nationally last month and rose by just 0.3 per cent. 

This slowdown comes after a strong 2.3 per cent month-on-month rise in March and a 3.5 per cent increase over the first quarter of the year. 

RP Data research director Tim Lawless said the broader trend in Canberra was clearly soft and could be attributed to the uncertainty evident across territory households.

He said this could be tied back to “government job shedding and imminent budget announcements and potential changes in government spending and cost cutting”.

Mr Lawless said news like the recommendations put forward by the Federal government’s Commission of Audit to slash more jobs would continue to affect the market.

"Potentially we’re already seeing the first signs of some of the speculation and the uncertainty within the Canberra marketplace with the decline over the month," he said.

"I think broadly housing demand is simply tapering away which is probably behind the slump in the numbers."

Mr Lawless said a shining light for the property owners in the Canberra market was rental yields, which were still tracking above the capital city average. 

He expects Canberra’s market to remain sluggish for the rest of the year with some modest declines.

"I don’t think the market's set for an implosion, I don’t think we'll see values falling dramatically but I think capital gains will probably be lower than household income growth if anything," Mr Lawless said.

According to an ANZ economic update, sales markets retain considerable momentum despite reduced auction clearance rates nationally and researchers expected further solid house price gains over the rest of the year.

However they expect price gains to moderate sharply in 2015 and beyond as interest rates began the long path towards neutral.

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