Canberra home values increased by 3.5 per cent during 2013 despite a slump in performance in the last quarter of the year.
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The ACT was the weakest performing capital city in the December quarter and was the only jurisdiction to show a fall in dwelling values.
RP Data – Rismark December home value index figures show Canberra dwellings fell 1.3 per cent during the quarter to a median price of $530,000.
Canberra houses increased in value by 3.7 per cent while units grew by a more moderate 1.5 per cent.
Capital city home values increased by almost 10 per cent during the year as markets boomed in Sydney, Melbourne and Perth.
RP Data senior research analyst Cameron Kusher said while Canberra did not record a particularly strong level of capital growth for the year it followed two years of declining values in the ACT.
"The last couple of years we've been seeing values falling so obviously it's more encouraging to see that home values have risen over the last year," he said.
"It's fairly similar to the typical levels of capital growth."
Mr Kusher said public sector job cuts were still hanging over the market and affecting consumer confidence and therefore decisions to buy and sell homes. He said this would likely continue until the Federal Budget was handed down in May.
"I think once there's some clarity around what's going to happen with the public sector then we'll start to see a change in sentiment one way or the other and that will start affecting values and volumes of sales in the city," Mr Kusher said.
He said Canberra's "middle of the road" performance compared to the other cities was down to this confidence and that housing stock levels were sufficient.
The ACT finished the year the fifth strongest performer behind Sydney (14.5 per cent), Perth (9.9 per cent), Melbourne (8.5 per cent) and Brisbane (5.1 per cent).
Real Estate Institute of the ACT president Michael Kumm said the growth represented some recovery in the market following the falls in value recorded after the capital's last peak in 2010.
He said auction clearance rates had returned to healthy clearance levels in 2013 following two years where few properties sold under the hammer.
Mr Kumm said the data issued for the change in house values over 10 years showed "Sydney had some catching up to do" as Canberra recorded 3.6 per cent to Sydney's 2.9 per cent.
Nationally capital city markets showed the highest growth in home values over a calendar year for four years.
The eight cities' combined home values increased by 9.8 per cent during 2013 - the highest since 2009's growth of 13.7 per cent.
ANZ Research analysists said solid gains in house prices in December were led by Melbourne, Brisbane and Perth and low interest rates would continue the trend in 2014.
"Despite speculation that strong price gains represent the early stages of a house price bubble, gains are largely explained by improved affordability, the release of pent-up sales and some 'catch up' following earlier price falls," they said.
Canberra also recorded falling rental rates during the year for houses and units, which each declined by 0.4 per cent.