Aimed at boosting economic activity, recent interest rate cuts have also encouraged banks to adjust mortgage lending rates lower, which will support more homebuyers in the Canberra market
Slower sales are being experienced as more listings come to market, with some buyers remaining cautious due to tightened lending conditions and forecast downward pressure on interest rates
Winter/25
Canberra Residential
Although property prices have softened, early signs of recovery are emerging, supported by stabilising buyer sentiment with improving affordability and the expectation market conditions will strengthen
Rental conditions remain challenging for tenants while residential vacancy remains low Rents are likely to remain elevated until housing supply improves.
The Economy Key Drivers
Interest Rate
3.85%
The Reserve Bank of Australia (RBA) lowered the interest rate target 25 bps to 3 85% in May 2025 Many banks followed this direction and adjusted their mortgage lending rates accordingly. Interest rates significantly influence the cost of borrowing money, which in turn affects the willingness and ability to apply for a home loan. The RBA forecasts the target could be 3 40% by the end of 2025, and 3 20% in 2026 When interest rates are lowered, borrowing becomes cheaper, which can stimulate demand for residential property and drive economic growth
Unemployment Rate
4.3%
Employment levels influence people’s ability to initially purchase a home and then the ongoing mortgage repayments servicing the loan The unemployment rate in Australia was 4 3% in March 2025, which is considered a healthy, balanced labour market given the rate falls within the ideal range of 4% to 5% The RBA forecasts the unemployment rate to rise by the end of 2025 to 4.3%, then remain relatively steady in 2026
Economic Growth 1.3%
Economic growth remains a key driver because it fuels job creation, boosts incomes, and increases demand across property markets Australia recorded economic growth at 1.3% in 2024, following stronger performance of 3.1% in 2022 and 1 5% in 2023 Looking forward, the RBA forecasts economic growth to lift to 2.1% in 2025 and 2.2% in 2026. Ideally, sustainable economic growth is considered to be around 2% to 3%
Population Growth
1.6%
Population growth increases housing demand as more people require places to live, putting pressure on existing housing supply and infrastructure. The Canberra annual population growth slowed to 1 0% in June 2022 as a consequence of slower migration throughout the pandemic, then rebounded to 2 1% in 2023, to record 1 6% growth in 2024 The ABS have projected the long term population growth for Canberra at 1.5%.
Source: McGrath Research, RBA, ABS
Residential Sales Update
Sales -28%
Sale transactions in Canberra tallied to 2,326 residential homes in the first quarter of 2025, a downward movement of 28% from the previous quarter Although over the past year, the total number was 3% higher, reaching 11,629 sales. This was influenced by the total number of listings being 28 5% higher in the four weeks ending March 2025 when compared to the equivalent period last year. Other factors include the tighter lending environment with fewer people qualifying for loans and market anticipating a further reduction in interest rates by the end of the year.
Total Number of Sales
Source: McGrath Research APM
Auctions
There were 73 property auctions held in Canberra in the week ending 30 March 2025 According to CoreLogic, 45 2% of the homes were sold under the hammer. This was lower than one quarter ago at 53 2%, when 78 auctions were held By comparison, the same quarter last year saw 56 5% sold, from 46 auctions. Clearance rates above 70% suggest strong demand and a seller’s market, while a rate below 60% indicates weaker demand and a buyer’s market
45.2%
Auction Clearance Rate Canberra
Source: McGrath Research, CoreLogic
Source: McGrath Research, APM
Residential Sales Update
Duration
74 days
Homes in Canberra took an average 74 days on marketfrom the time they were listed to the day they went under contract - in the March 2025 quarter This duration was 60 days the quarter before and a similar 74 days one year ago Historically, houses have sold faster than apartments and this was no different in the past quarter Houses averaged 66 days to sell in Q1 2025, which was 20 days longer than in Q4 2024 but 5 days less than in Q1 2024 Apartments took an average 87 days to sell, being 3 days longer than the previous quarter and 9 days more than a year ago A low number of days on market mean homes are selling fast with more desirable properties, while a high number of days suggests a slower market with above market values
Average Days on the Market
Source: McGrath Research, APM
Newly advertised property listings in Canberra were 29 9% higher in the month of March 2025 than the equivalent period last year. This trended above the Australian average of 4 5%
Canberra’s total number of listings in the month of March 2025 were 28 5% above the equivalent period last year By comparison, total listings were 5.1% higher across Australia.
Source: McGrath Research, CoreLogic
Source: McGrath Research, APM
Residential Prices Update
Median Price
$859,500
Tracking median property prices provides a benchmark for homebuyers for market performance and helps identify emerging trends Residential property prices fell by 4 3% in the year to March 2025, with a 2.3% decrease recorded in the most recent quarter This brought the Canberra median value to $859,500, reflecting a recent downward trajectory in housing demand. Median house prices, at $1,049,000, are now trending at close to double the value of apartments at $532,000 in Q1 2025 House prices fell 1 3% from a quarter ago and fell 2 3% over the year In the same quarter, apartment prices declined by 5.7% and by 10.5% over the past year
Change in Median Prices
Canberra
Source: McGrath Research, APM
Price Outlook
+2%
Looking ahead, McGrath Research anticipates residential property prices to increase by 2% by the end of 2025, followed by a stronger 4% rise in 2026 These projections reflect ongoing demand from limited housing supply, lowered interest rates and improving consumer confidence, suggesting a gradual recovery in the housing market over the next two years
Forecast for Median Prices
Canberra
Source: McGrath Research
Source: McGrath Research, APM
Residential Rents Update
Canberra residential rental vacancy was recorded at 1 6% in Q1 2025, falling 30 bps in the quarter but remained the same as a year ago. Generally, 3% vacancy is considered a balanced market between rental supply and demand Below this benchmark is considered to be an undersupplied pool of rental homes. Changes in rental vacancy can have a significant impact on the residential property market, influencing both rental prices and property values
Change in Residential Rental Vacancy
Canberra
Source: McGrath Research REINSW
Yield
+12 bps
Gross rental yields are a good initial measure of comparing the return of a property investment before expenses are deducted A range of 4 00% to 5 00% is considered good for many properties located in a capital city, while below this, may indicate high property prices relative to rent, or low rental demand Canberra residential gross rental yields rose 12 bps in the Q1 2025 quarter to be 4 50%, while this was 12 bps higher than a year ago. Apartment yields (5.80%) consistently outperform house yields (3 74%) across most markets House yields rose 1 bp in Q1 2025 and by 3 bps over the past year, while apartment yields were 32 bps higher in this past quarter and 28 bps above a year ago
Change in Gross Rental Yield Canberra
Source: McGrath Research APM
Source: McGrath Research, APM
Residential Rents Update
Median Weekly Rent
$655
Low vacancy is keeping rents elevated across Canberra Residential rents rose 1.6% in Q1 2025, while rents increased by 1 6% over the past year, to stand at $655 per week
Median weekly house rents were $125 higher than apartments, growing by 0.7% in Q1 2025 to $700 per week, with 2 2% growth over the past year Apartment weekly rents, at $575, rose 1 8% in Q1 2025 and in the past year by 0 9%
Change in Median Weekly Rents
Canberra
Source: McGrath Research APM
Rental Outlook +4%
While Canberra continues to experience tight residential rental supply, McGrath Research forecast sustained upward pressure on rents of 4% at the end of 2025, with a further 3% rental growth likely in 2026.
Forecast for Median Rents
Canberra
Source: McGrath Research,
Source: McGrath Research
Canberra Canberra refers to the Greater Capital City Statistical Area or ‘Greater Canberra’ as defined by the Australian Bureau of Statistics
