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The real estate market in Canberra: 2024 forecast

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As we step into the year 2024, the real estate landscape in Canberra continues to evolve, presenting both challenges and opportunities for investors, homeowners, and industry stakeholders.

In this article, we will give you a clear picture of what's happening in Canberra's real estate scene for the year ahead.

If you need a full and more detailed report, with fresh data and actionable advice, please note that you can get our property pack for Australia. This pack will also give you unlimited access to our team of experts, allowing you to ask them anything related to the housing market in Canberra specifically.

How's the Australian economy doing?

Current state

The real estate market in Canberra, and Australia more broadly, has been influenced by a range of factors, including the country's economic performance, government policies, and local market dynamics.

Historically, Australia's economy has been characterized by stability and consistent growth, which has been a key driver for the real estate market.

This stability, underpinned by a strong political and financial system, has made Australia, and Canberra in particular, an attractive destination for property investment.

In terms of the real estate market overall, there has been a trend of rising property values over the years. Canberra, as the capital city, has seen significant growth due to its stable job market, largely driven by government and public sector employment. This stability translates into a steady demand for housing, both for purchase and rental.

Specifically looking at the housing market, Canberra has experienced a high demand for residential properties. This is partly due to the city's planned design and limited land releases, which have historically kept supply somewhat constrained.

The demand is also fueled by Canberra's high average incomes and a population that values homeownership.

Government policies have played a crucial role in shaping the housing market. For instance, policies such as the First Home Owner Grant and various stamp duty concessions have encouraged home ownership.

More recently, there have been measures to cool down the overheated markets in major cities, though Canberra has been less affected compared to Sydney or Melbourne.

Notable events impacting the market include the global financial crisis of 2008 and the COVID-19 pandemic. The former led to a temporary slowdown in the market, while the pandemic initially caused uncertainty but was followed by a surge in property values, partly due to lower interest rates and government stimulus measures.

Regarding regulatory changes, there have been updates in lending criteria and property tax adjustments. These changes aim to ensure the financial stability of the housing market and protect home buyers from taking on excessive debt.

From a local perspective, Canberra is indeed an area where people like to invest in real estate. The city's consistent population growth, high employment rates, and the presence of national institutions make it a stable investment choice. Properties in central locations and suburbs close to amenities are particularly sought after.

For foreign investors, specific incentives include the potential for capital growth and rental yields. They also face drawbacks like higher stamp duty and restrictions on purchasing certain types of properties.

Additionally, foreign investors must navigate the Foreign Investment Review Board's regulations.

In comparison to neighboring areas, Canberra's real estate prices are generally higher, reflecting its status as the capital city with a high standard of living. Compared to Sydney or Melbourne, it can offer better value for money.

Finally, the legal framework surrounding real estate investment in Australia is known for its stability and transparency. This includes clear property rights, a reliable land registration system, and a straightforward process for buying and selling property.

However, investors must be aware of local laws and regulations, which can vary between states and territories.

Outlook and forecast

Canberra's real estate market is unique in several ways, its status as Australia's capital means a significant proportion of its workforce is employed in the public sector.

This employment stability contributes to a consistently strong demand for housing. Another unique factor is the city's design; Canberra is a planned city, with a layout that influences both residential and commercial property distributions.

Forecasting Canberra's economy and stability, we can expect a generally positive outlook. The city's economy is closely tied to the public sector, which provides a level of insulation against the economic volatility that other regions might experience.

This doesn't necessarily mean Canberra experiences faster growth than other Australian cities, but it does suggest a more stable growth pattern. Cities like Sydney and Melbourne might see more dynamic growth due to their larger and more diverse economies, but Canberra's growth is expected to be steady and sustainable.

Looking ahead to 2024, any anticipated changes in government policies could impact the real estate market. One area to watch is housing affordability initiatives. If the government introduces new measures to help first-time buyers or to cool an overheated market, this could affect property values and demand.

Additionally, changes in taxation or investment policies for foreign investors could also influence the market dynamics.

Specific factors suggesting improvements in Canberra include ongoing infrastructure developments, such as expanded public transportation networks or new commercial precincts. These developments can increase the attractiveness of certain areas, potentially leading to higher property values.

For instance, if a new light rail line improves connectivity in a previously less accessible suburb, properties in that area might become more desirable.

However, there are potential risks to consider. One is the reliance on the public sector; any significant government cutbacks or restructuring could impact local employment and, subsequently, the housing market.

Another risk is the possibility of an oversupply in certain property segments, such as apartments, which could lead to a price correction.

If these risks materialize, the real estate market could see a decrease in property values, especially in areas directly affected by these changes.

For example, a suburb heavily reliant on public sector employees might see a dip in housing demand if there are significant job cuts in the government.

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What about housing prices in Canberra?

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Current state

In Canberra, the trend in real estate prices over the past few years has been generally upward.

This increase in property values can be attributed to several factors, including the city's steady population growth, stable employment, particularly in the public sector, and limited housing supply relative to demand.

Regarding the response to past economic crises or booms, Canberra's real estate market has shown resilience. For example, during the global financial crisis in 2008, while other cities experienced significant downturns, Canberra's market remained relatively stable.

This stability is partly due to the city's employment base being largely in the public sector, which isn't as susceptible to economic downturns as the private sector.

Comparing current real estate prices to those a decade ago, there's been a notable increase. The growth in prices over this period reflects the consistent demand for housing, driven by factors like population growth and the city's overall economic health.

It's not just about more people wanting homes; it's also about Canberra's appeal as a place to live, with its high living standards and well-planned urban infrastructure.

Currently, real estate prices in Canberra are either rising or stable, depending on the specific area and property type. For example, detached houses in well-established suburbs, particularly those close to the city center or with good amenities, have seen significant price growth.

This trend is due to the high demand for family-friendly living spaces and the limited availability of such properties in these desirable locations.

Speaking of property types, it's the detached houses and, to a lesser extent, townhouses, that are experiencing the highest growth in real estate prices.

The preference for these types of properties has been partly driven by lifestyle changes, especially post-pandemic, where people are seeking more space and comfort in their living environments.

The population in Canberra has been steadily increasing in recent years. This growth is not just due to natural increase (births minus deaths) but also migration, both from other parts of Australia and internationally.

The city's reputation as a hub for government and defense-related jobs, along with its educational institutions, attracts people looking for employment and educational opportunities.

These trends in population and property type preferences are interrelated. As more people move to Canberra for work or study, the demand for housing increases, pushing up property prices.

The specific facts driving these trends include the city's economic stability, employment opportunities, and its appeal as a liveable city with good amenities and a high standard of living.

Outlook and forecast

In Canberra, several economic and demographic factors are currently influencing real estate prices.

Firstly, the city's stable employment, particularly in the public sector, underpins the real estate market. This job stability ensures a steady demand for housing.

Secondly, Canberra's population growth, driven by internal migration and international arrivals, is increasing demand for housing. This population growth isn't just numbers; it's about more people looking for homes, contributing to the upward pressure on prices.

Specific factors that could lead to an increase in housing prices in Canberra in the near future include continued infrastructure development, such as new transport links or commercial hubs, which can make certain areas more attractive and increase property values.

Another factor is the limited land release for new housing developments, which can constrain supply in the face of growing demand.

Additionally, if there's an increase in investment from both domestic and international investors, attracted by Canberra's stable market, this could further drive up prices.

It's important to note that these factors might not affect all cities and regions in Australia in the same way. For example, cities with more volatile employment sectors or slower population growth might not experience the same level of price increase as Canberra.

Conversely, specific facts or trends that could lead to a decrease in housing prices in Canberra include economic downturns affecting the public sector, which is a major employer in the city.

If there were significant job cuts or freezes in public spending, this could reduce demand for housing and put downward pressure on prices.

Another potential factor is changes in lending standards or interest rates. If borrowing becomes more expensive or difficult, this could reduce the number of potential buyers in the market.

It's also important to understand that these potential downward factors might not uniformly affect all regions of Australia. Different cities and regions have unique economic drivers and conditions.

For instance, a mining boom in Western Australia might have little direct impact on Canberra's market but could significantly affect property prices in Perth or other mining-centric regions.

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How's the demand for the real estate market in Canberra?

Current state

The current demand for residential real estate in Canberra is robust, driven by various factors like the city's stable job market, population growth, and overall appeal as a place to live.

In this scenario, there tends to be more buyers than sellers, creating a seller's market. This demand is particularly pronounced for certain types of properties, such as detached houses and townhouses, which are favored for their space and privacy.

These properties are especially sought after in well-established suburbs close to the city center or those with good amenities like parks, schools, and shopping areas.

The supply of new housing in Canberra is an ongoing challenge. While there are developments and land releases, these often struggle to keep pace with the growing demand. The limited supply, particularly of detached houses and larger townhomes, contributes to the competitive market conditions and upward pressure on prices.

Regarding the types of properties buyers are looking for, there's a noticeable preference for properties with more space – both indoor and outdoor.

This trend has been partly influenced by lifestyle changes, where people are seeking comfortable living spaces that can accommodate remote work and offer recreational space. Suburbs that offer a good balance of accessibility, amenities, and community feel are particularly in demand.

The current interest rates for mortgages play a significant role in shaping the buying power and demand of consumers. In a low-interest-rate environment, borrowing becomes cheaper, increasing the purchasing power of buyers. This can lead to more people entering the market, further fueling demand for housing.

However, it's important to note that even small increases in interest rates can have a significant impact on affordability, especially in a high-demand market like Canberra.

Recent changes in government policies or regulations can also impact the local real estate market. For instance, any adjustments in tax policy related to property ownership, such as changes in stamp duty, can influence buyer and seller behavior.

Similarly, subsidies or grants for first-time homebuyers can bring more people into the market, increasing demand. On the other hand, changes in zoning laws or development regulations can affect the supply side by either enabling or restricting new housing developments.

Outlook and forecast

In Canberra, demographic shifts like aging populations and urbanization are notably influencing the demand in the real estate market.

An aging population often leads to increased demand for smaller, more manageable properties, like single-level homes or apartments that are easier to maintain and navigate. These properties are also typically sought after in areas with accessible healthcare and community services.

Urbanization, on the other hand, drives demand for properties located in or near city centers, where amenities and employment opportunities are concentrated.

This trend supports the popularity of apartments and townhouses in Canberra, particularly for younger professionals and smaller households who value proximity to work, entertainment, and urban lifestyle amenities.

Current trends in household formation, such as the rise in single-person households and smaller family sizes, are influencing the demand for different property types.

There's a growing preference for smaller, more affordable properties, like apartments and smaller townhouses. These properties appeal to first-time homebuyers, young professionals, and downsizers who are looking for more manageable living spaces.

In terms of real estate as an investment in Canberra, there's a noticeable trend towards purchasing properties with the intent of renting them out.

The stable rental market in Canberra, driven by its transient population of government and university sectors, makes it an attractive option for investors. Investment properties are often apartments or smaller houses, which are easier to rent out and maintain.

Cultural trends are also shaping the demand in the housing market. For example, an increasing focus on sustainability and eco-friendliness is driving interest in properties that feature energy-efficient designs, solar panels, or green building materials.

This trend favors properties that are either newly built with these features or older properties that have been renovated to include them.

Regarding the role of foreign investment, it plays a significant part in the Canberra real estate market. Foreign investors tend to focus on new developments, particularly apartments, as these often meet the criteria set out by foreign investment regulations. This demand can lead to an increase in the construction of such properties.

There are both restrictions and incentives for foreign investors in Australia. Restrictions include limitations on buying established properties and additional taxes or fees.

However, there are incentives as well, such as the ability to purchase new properties, which can boost demand for certain types of housing, particularly new apartment developments.

Finally, niche markets in Canberra are experiencing their unique trends. For instance, the luxury property market caters to high-net-worth individuals and often focuses on exclusive suburbs with unique features like waterfront views or large estates.

There's also a growing interest in eco-friendly homes, which cater to environmentally conscious buyers looking for sustainable living options. These niche markets, while smaller than the broader market, highlight the diverse needs and preferences of buyers in Canberra's real estate market.

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How's the rental market in Canberra?

Current state

In Canberra, the demand for rental properties is generally strong, reflecting the city's steady population growth and the transient nature of many residents, particularly those connected to government, academia, and the defense sectors.

The types of rental properties in high demand can vary, but there are some clear trends.

Apartments, especially those located in or near the city center and major employment hubs, are highly sought after. This demand is driven largely by young professionals and singles who value proximity to work, urban amenities, and lifestyle factors.

These apartments are typically preferred for their convenience, low maintenance, and access to amenities like public transport, shops, and entertainment.

Single-family homes are more in demand in suburban areas, especially among families and older renters who prioritize space, quiet, and access to schools and community facilities. Features like multiple bedrooms, gardens, and garages are particularly valued in these properties.

Shared accommodations are popular among students and young professionals, particularly in areas close to universities or major employment areas. This demand reflects the affordability of shared living and the social opportunities it presents for people in these demographic groups.

Tenant preferences vary significantly between urban, suburban, and rural areas. In urban areas, tenants often prioritize location and convenience over size, opting for smaller apartments that are close to amenities and work.

In suburban areas, the focus shifts to larger properties with more living space, outdoor areas, and proximity to schools and family-oriented amenities. In rural areas, tenants might prioritize larger properties with more privacy and natural surroundings.

Demographic characteristics of tenants also vary. Urban areas tend to attract younger tenants, including singles and young couples, often with no children.

Suburban regions are more likely to house families and older renters, who appreciate the additional space and quieter environment. Rural areas might attract a mix, including those seeking lifestyle changes or more affordable housing options.

Income levels and economic factors heavily influence rental choices. Higher-income tenants are more likely to rent larger properties or apartments in premium locations.

While those with lower incomes may opt for more affordable options, like smaller apartments or shared accommodations. The availability of rental assistance programs can also play a role in housing choices for lower-income tenants.

Certain regions in Canberra have a high concentration of specific tenant groups. Areas close to universities, like Acton or Bruce, are popular among students.

Young professionals might cluster in central areas like Braddon or Kingston, which offer a vibrant lifestyle and proximity to the city.

Suburbs like Woden or Belconnen are popular among families due to their schools, parks, and family-friendly amenities. Retirees may prefer quieter suburbs or even rural areas that offer a peaceful environment and community facilities catering to their needs.

Outlook and forecast

The rental market in Canberra is influenced by several key factors, one of the primary drivers is the city’s role as the administrative center of Australia, housing many government departments and institutions.

This creates a steady influx of government employees, contractors, and students, all needing temporary or long-term accommodation. Consequently, areas close to government offices and educational institutions often have high rental demand.

Evolving lifestyles and work patterns, especially the rise of remote work, are significantly influencing rental preferences. There's an increasing demand for properties with dedicated home office spaces or extra rooms that can be converted into workspaces.

Additionally, as remote work offers more flexibility in terms of location, some renters are choosing properties in quieter, more spacious suburban or even rural areas, where they can get more space for their money compared to the city center.

Demographic changes, such as an aging population and the growth of single-person households, also impact the rental market. Older renters may look for smaller, more manageable properties, often in quieter suburbs or close to healthcare facilities. Young singles, meanwhile, often prefer urban apartments close to amenities and social opportunities.

Emerging urban areas in Canberra are becoming new hotspots for rental properties. Districts undergoing redevelopment or new infrastructure projects, like improved transportation links or commercial hubs, attract renters looking for convenience and modern living. These areas often see a rise in new apartment complexes catering to professionals and young families.

Technological advancements are impacting the rental market as well. The integration of smart home technologies, high-speed internet, and energy-efficient appliances is becoming increasingly important to renters. Properties equipped with these features are often more attractive to tech-savvy tenants and can command higher rents.

Sustainability and green living trends are also influencing the rental market. There's growing interest in properties with eco-friendly features like solar panels, water-saving fixtures, and energy-efficient building materials. Tenants are increasingly conscious of their environmental impact and often prefer rentals that align with these values.

The rental market forecast can vary across different regions of Australia. In cities with a high concentration of industries like technology, finance, or education, such as Sydney or Melbourne, the demand for rentals close to these employment hubs remains high.

In contrast, regions more dependent on sectors like tourism or manufacturing might see different rental market dynamics, especially if those industries face challenges.

The long-term outlook for the rental market in Canberra is generally positive, considering the city’s steady employment base, ongoing population growth, and its appeal as a liveable city.

The market is expected to remain robust, with continuous demand for rental properties, especially those that cater to evolving lifestyle and work preferences, such as properties suitable for remote work or with sustainable features.

Regarding niche markets, luxury properties and eco-friendly homes in Canberra are experiencing unique trends. The luxury rental market, catering to high-income earners, often sees demand for properties with premium amenities, prime locations, and larger living spaces.

The eco-friendly rental market is growing too, with a focus on properties that offer sustainable living options, appealing to environmentally conscious tenants.

Make sure you understand the real estate market in Canberra

Don't rush into buying the wrong property in Australia. Sit, relax and read our guide to avoid costly mistakes and make the best investment possible.

real estate market Canberra

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.