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Canberra's apartment market is experiencing a significant oversupply situation as of mid-2025, with clear data showing genuine excess stock in key suburbs.
Several specific areas including Gungahlin, Belconnen, and Denman Prospect have seen apartment listings surge 40-45% above typical levels, creating downward pressure on both prices and rental yields. Unit prices have dropped 10.6% year-on-year to a median of $531,784 as of March 2025, marking the steepest decline in 30 years.
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Canberra's apartment oversupply is a real phenomenon backed by concrete data, not just media speculation, with vacancy rates rising to 1.6% and construction completions reaching 19,900 units in 2024.
The oversupply primarily affects outer suburbs like Gungahlin, Belconnen, and newer developments in Denman Prospect, while established inner suburbs maintain stronger demand and pricing stability.
| Metric | Current Status (June 2025) | Year-on-Year Change |
|---|---|---|
| Apartment Completions 2024 | 19,900 units | +5% from 2022 |
| Vacancy Rate | 1.6% | +0.3% from 1.3% (Feb 2024) |
| Median Unit Price | $531,784 | -10.6% year-on-year |
| Weekly Rent | $370 | +5.7% year-on-year |
| Worst Affected Suburb | Denman Prospect | -22.2% house prices |
| Units Under Construction | 30,000 nationally | Highest since 2020 |
| Average Rental Yield | 4.1% | Above national average of 3.7% |
What's the actual data showing about the number of new apartments built in Canberra recently?
Canberra completed 19,900 apartment units in 2024, representing a 5% increase from 2022 levels.
Despite this increase, the 2024 completions were still nearly 10,000 fewer units than the average annual completions recorded between 2017 and 2024. This indicates that while there was growth, it wasn't exceptionally high by historical standards.
The construction pipeline shows nearly 30,000 apartments under construction nationally that are expected to complete in 2025, marking the highest level since 2020. However, the approval system has become volatile, with only 16 apartments approved in April 2025, a steep drop from previous months.
This data reveals a concerning pattern where existing projects are completing while new approvals have slowed dramatically, suggesting the oversupply may be temporary if the approval bottleneck continues.
It's something we develop in our Australia property pack.
Are vacancy rates rising in Canberra and how do they compare to previous years?
Canberra's rental vacancy rate increased to 1.6% in February 2025, up from 1.3% in February 2024.
This 1.6% rate matches the previous high of 1.8% recorded in 2023, representing a clear reversal from the ultra-tight rental conditions experienced in 2022-2023. The increase indicates that more rental properties are becoming available, which typically signals reduced competition among tenants.
However, the current 1.6% vacancy rate remains low by historical standards, indicating the rental market is still constrained compared to long-term averages. Most real estate professionals consider vacancy rates below 2% as tight rental markets, while rates above 3% typically indicate oversupply.
The gradual increase from 1.3% to 1.6% over one year suggests a steady but not dramatic shift toward a more balanced rental market, rather than a sudden collapse in rental demand.
What's happening to rental prices—are they going up, staying flat, or dropping?
Rental prices in Canberra are continuing to rise, with the median weekly rent for apartments reaching $370 as of May 2025, up 5.7% year-on-year.
This growth aligns with the national trend where apartment rents rose 3.2% in the March 2025 quarter, with Canberra performing slightly above the national average. The pace of rent growth has actually accelerated again after experiencing a brief slowdown at the end of 2024.
The continued rent increases despite rising vacancy rates indicate that while supply has increased, demand remains strong enough to support price growth. This suggests landlords still have pricing power, though the rate of increase may moderate as vacancy rates continue to rise.
For context, two-bedroom apartments in Canberra averaged around $592 in late 2024, with current median rents reaching $620 per week by mid-2025, representing steady upward pressure on rental costs.
Are property prices for apartments falling, stabilizing, or still growing?
Canberra apartment prices are falling significantly, with unit prices declining for the third consecutive quarter to a median of $531,784 in March 2025.
This represents a severe 5.7% drop for the quarter and a 10.6% annual decline—the steepest fall in 30 years. The median now sits at a four-year low, $97,200 (15.5%) below its September 2023 peak, indicating a substantial correction in the apartment market.
Some forecasts suggest the market may be bottoming out and could see stabilization or modest growth later in 2025, particularly if interest rates begin to fall. However, the oversupply in certain suburbs continues to create downward pressure on prices.
The dramatic price decline contrasts sharply with the rental market, where rents continue to rise, creating an unusual situation where purchase prices fall while rental yields improve for investors who can weather the capital value declines.
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Which specific suburbs or precincts in Canberra have the highest apartment oversupply right now?
Gungahlin, Belconnen, Greenway, and Denman Prospect are experiencing the most significant apartment oversupply as of mid-2025.
| Suburb | Oversupply Level | Price Impact |
|---|---|---|
| Gungahlin | 40-45% above typical listing levels | Median unit yields 6.2% but prices declining |
| Denman Prospect | Excess stock in both apartments and houses | House prices fell 22.2% in 2024 |
| Belconnen | High concentration of new apartments | Prices grew 17.8% to $530,000 (still affordable) |
| Greenway | Significant new supply completion | Continued price softening expected |
| Phillip | Large-scale developments near hospital | Strong rental demand but price pressure |
Denman Prospect has been particularly affected, with the suburb experiencing oversupply in both apartments and houses, leading to a 22.2% decline in house prices during 2024. Industry professionals describe it as having "too much stock" available, which dilutes any market strength.
These suburbs have seen their listing stock grow substantially above normal levels, with properties staying on the market for extended periods, creating increased negotiating power for buyers and tenants.
Is this oversupply being talked about based on actual numbers, or is it more of a public/media perception?
The oversupply is supported by concrete data and real market metrics, not just media speculation or public perception.
Listing growth for units and townhouses has demonstrably outpaced that for houses, with older stock (properties on the market for over 180 days) reaching record highs. This extended time on market indicates genuine difficulty in finding buyers, not just temporary market hesitation.
The sharp drop in new approvals to just 16 apartments in April 2025 from much higher previous months provides clear evidence of a real challenge in the approval system and market dynamics. These are measurable, quantifiable changes in market behavior.
Real estate professionals in the market are reporting specific suburb-level impacts, with agents like Ahmad Souweid from Blackshaw Manuka stating there's "just too much stock" in areas like Denman Prospect, backed by actual sales data and inventory levels.
The 40-45% increase in listing stock in Gungahlin compared to typical levels represents hard data that can be measured and verified, distinguishing this from mere market sentiment or media narrative.
What are the average rental yields for apartments across different parts of Canberra right now?
Canberra's apartment rental yields average 4.1%, which sits above the national average of 3.7%, making it relatively attractive for investors focused on income returns.
| Suburb | Median Unit Price | Median Weekly Rent | Rental Yield |
|---|---|---|---|
| Gungahlin | $450,000 | $535 | 6.2% |
| Curtin | $385,000 | $485 | 6.0% |
| Hawker | $402,500 | $500 | 5.9% |
| Belconnen | $470,000 | $540 | 5.8% |
| Hughes | $330,000 | $400 | 5.8% |
Gungahlin leads with rental yields reaching 6.2%, which is particularly strong for the Australian market. This high yield partly reflects the lower purchase prices due to oversupply, combined with sustained rental demand from the area's growing population and proximity to employment centers.
It's something we develop in our Australia property pack.
Is demand for apartments in Canberra still healthy, or has it dropped—and why?
Apartment demand in Canberra has softened noticeably, evidenced by rising vacancy rates and a buildup of unsold stock, particularly in oversupplied suburbs.
Several key factors are driving reduced demand: higher interest rates have reduced buyer borrowing capacity, affordability pressures have intensified with median unit prices still above $530,000, and population growth has moderated compared to the rapid expansion seen in 2020-2022.
Economic conditions in the ACT have also cooled, with jobs growth and economic expansion slowing from the rapid pace seen during the pandemic period. This affects both local buyers and the investor market that previously drove much of the apartment demand.
However, there are emerging signs of renewed buyer interest as interest rates are expected to fall throughout 2025 and affordability improves due to the price corrections. Some market observers expect this to create a more balanced market rather than continued decline.
The rental market remains relatively healthy with 1.6% vacancy rates still considered tight, suggesting underlying housing demand persists even as purchase demand has weakened.
We did some research and made this infographic to help you quickly compare rental yields of the major cities in Australia versus those in neighboring countries. It provides a clear view of how this country positions itself as a real estate investment destination, which might interest you if you're planning to invest there.
What's driving this oversupply—government planning, developer speculation, population slowdown, or something else?
The oversupply results from a combination of government planning decisions, developer speculation during 2020-2021, and moderated population growth not keeping pace with completed developments.
- Government Planning: Release of land and approval of high-density projects in specific precincts like Gungahlin and Belconnen created concentrated supply in particular areas
- Developer Speculation: Many investors purchased during the 2020-2021 boom expecting continued growth, but rising interest rates forced some to sell, flooding the market with available units
- Population Growth Slowdown: Canberra's population growth has moderated significantly from pandemic highs, not keeping pace with the volume of new apartments coming online
- Construction Timing Issues: Projects approved during high-demand periods completed during softer market conditions, creating a supply-demand mismatch
- Cost Pressures: While some projects were delayed or shelved due to construction costs, those that completed added to current stock levels during weakened demand
The government's land release strategy concentrated apartment development in outer suburbs while employment and amenities remained centralized, creating geographic mismatches between supply and demand preferences.
Based on current construction pipelines and approvals, will the oversupply likely continue in the short and medium term?
The oversupply situation will likely ease in the medium term due to sharply reduced new approvals, though short-term challenges will persist as existing projects complete.
With only 16 apartments approved in April 2025 compared to much higher previous months, the construction pipeline has become significantly constrained. This dramatic reduction in new project approvals suggests oversupply may resolve within 2-3 years if the approval bottleneck continues.
Nationally, apartment construction is running below what's needed to meet long-term population growth, but Canberra's challenge is matching the type and location of new supply to local demand patterns. The geographic concentration of oversupply in specific suburbs means some areas may recover faster than others.
Construction industry challenges including high costs, labor shortages, and financing difficulties are causing many developers to delay or cancel planned projects, which will help rebalance supply and demand over the medium term.
If population growth picks up again or interest rates fall substantially, the current oversupply could be absorbed relatively quickly, potentially leading to renewed supply shortages within 3-5 years if new construction doesn't ramp up accordingly.
What are the likely consequences of this oversupply over the next 1, 3, and 5 years for owners, tenants, and investors?
The oversupply will create different impacts across short, medium, and long-term timeframes for various market participants.
Short-term (1 year):
Apartment owners will face continued downward pressure on prices, particularly in oversupplied suburbs like Gungahlin and Denman Prospect. Selling times will remain extended, and some owners may need to accept lower prices than expected. Investors may experience reduced capital growth but will benefit from slightly higher vacancy rates giving tenants more choice.
Medium-term (3 years):
As new supply slows due to reduced approvals, the market should begin rebalancing, especially if population growth picks up or interest rates fall as expected. Some suburbs may see price stabilization or modest recovery as affordability attracts buyers back to the market. Rental markets may tighten again as supply growth slows.
Long-term (5 years):
If construction remains subdued, the oversupply should resolve completely, possibly leading to renewed price growth and tighter rental markets. Investors who purchased during the oversupply period at discounted prices may see strong capital gains. However, this depends on sustained population growth and economic conditions remaining favorable.
Tenants will benefit most in the short term from increased choice and potentially slower rent growth, though Canberra rents are still rising despite oversupply.
If I'm looking to buy an apartment in Canberra now, how should I approach it—where are the risks, and where are the opportunities?
Buying an apartment in Canberra now requires careful suburb selection and a clear understanding of both risks and opportunities in the current market.
Key Risks:
- Avoid oversupplied suburbs (Gungahlin, Belconnen, Greenway, Denman Prospect) where further price declines and longer vacancy periods are likely
- New developments in these areas may face extended selling periods and reduced capital growth prospects for several years
- High-density complexes with many similar units competing for the same tenant pool face particular challenges
- Properties requiring significant immediate capital expenditure should be avoided as returns may be further compressed
- Off-the-plan purchases in oversupplied areas carry substantial completion risk and potential settlement difficulties
Prime Opportunities:
- Affordability is at multi-year highs, with prices 15.5% below 2023 peaks, providing entry opportunities for long-term investors
- Rental yields in some areas (Gungahlin 6.2%, Curtin 6.0%) are above 6%, providing solid income even with flat capital growth
- Established suburbs with limited new supply and strong local amenities may see faster recovery as the market stabilizes
- Properties near major infrastructure like hospitals, universities, or the expanding light rail network offer better long-term prospects
- Well-located older apartments needing minor improvements can provide value-add opportunities in a soft market
Recommended Approach:
Focus on established suburbs with limited new supply, strong rental demand, and good infrastructure connections. Avoid areas with obvious apartment gluts unless purchasing at significant discounts with a long-term investment horizon of 5+ years.
It's something we develop in our Australia property pack.
Conclusion
This article is for informational purposes only and should not be considered financial advice. Readers are advised to consult with a qualified professional before making any investment decisions. We do not assume any liability for actions taken based on the information provided.
Canberra's apartment oversupply represents a genuine market challenge backed by concrete data, with specific suburbs experiencing significant excess stock that will take time to absorb.
While this creates risks for buyers in oversupplied areas, it also presents opportunities for savvy investors who can identify well-located properties at discounted prices with strong rental yields.