Canberrans could be forgiven for breathing a sigh of relief upon reading the headlines about property price drops in Melbourne and Sydney, while the capital managed to record another month of increases.
While Sydney property values are falling at the fastest pace since the global financial crisis, dropping 6.1 per cent in a year according to CoreLogic, property values in Canberra went up by 2 per cent in the same time.
That doesn't mean that it's time for home owners in the territory to get smug or complacent, believing we are insulated from what is happening elsewhere.
The increase in Canberra's property prices
rising by 3.1 per cent in the past year, while units experienced a 1.4 per cent drop in value. Figures like that, combined with tightened lending practices and the prospect of further regulation on the back of the financial services royal commission, give pause for thought.
Looking at the cranes across the Canberra skyline, with apartment complexes sprouting in almost every town centre, we would be naive to believe our city will be insulated from the market forces of supply and demand.
Following yesterday's headlines, analysts attributed the brake on property prices to tighter lending practices, which cut borrowing capacity for owner-occupiers by 7 to 10 per cent, and for investors by about 20 per cent.
It's considered likely that commissioner Kenneth Hayne will recommend banks conduct more thorough checks to ensure borrowers can pay off their loans, with full income and expense verification to assess their capability to pay.
UBS analyst Jonathan Mott
that could reduce maximum borrowing capacity by about 30 per cent.
At the same time, the Reserve Bank of Australia
to once again leave interest rates at the record low of 1.5 per cent. In his statement, reserve bank governor Philip Lowe said that while the Australian economy grew strongly over the last year, household consumption is a continuing source of uncertainty. "Growth in household income remains low and debt levels are high."
"Credit conditions are tighter than they have been for some time, although mortgage rates remain low and there is strong competition for borrowers of high credit quality," he said.
Interest rates are low, and are likely to remain stable until at least mid-next year. But mortgages are 20 or 30 year prospects and in recent months three of the big four banks have increased their variable home loan rates out of cycle with the central bank.
As each of these factors are added to another, there are more reasons to approach the housing market and one's financial situation with caution, but not panic.
It's difficult to consider when wage growth has stalled, but prospective home owners need to consider whether they are prepared for interest rates to be significantly more than what they are offered at first glance by a bank, and to consider what they might do if the value of their asset went down instead of up.
At the moment the Canberra property market offers a slight respite to both those buying and selling, compared to other major cities along the Eastern coast, but we can't pretend it's forever. After all, only fools rush in.