Canberra property prices continued to surge during the June quarter as the runaway housing markets of Sydney and Melbourne led the nation.
Australian Bureau of Statistics figures for the three months to June show Canberra residential prices grew by 7.9 per cent compared to the same time last year. The growth of house prices in the capital is the second strongest figure in recent years, topped only by the March result of 8.9 per cent.
That price growth in Canberra has been steadily accelerating since 2013, but still failed to reach the eight capital city average of 10.2 per cent for June, driven largely by the country's two largest markets, Sydney and Melbourne, which grew by 14.4 per cent and 13.4 per cent respectively.
Housing Industry Association senior economist Shane Garrett said a combination of factors including low interest rates, tight land releases and interest from interstate and international investors were contributing to the growth in Canberra residential property prices.
"Canberra has underperformed those markets in the last 5 or so years compared to the nearly 80 per cent increase in values of Sydney and Melbourne over the same time. So when you've got cities not that far away, there's a bit of catch-up going on," Mr Garrett said.
The NSW Government's stamp duty surcharge on foreign buyers was also encouraging some investors to look at other jurisdictions like the ACT.
Mr Garrett said strengthening interstate migration into the ACT was also driving demand for housing, as was the ACT's unique situation where the territory government kept tight control of the release of new blocks onto the market.
While the growth will be unwelcome news for first-home buyers in the ACT, apartment values had not grown to the same extent as detached homes and remained more affordable.
Elsewhere the picture was markedly different in the mining states of Western Australia and Queensland. In Perth, dwelling prices went backwards by 3.5 per cent while Brisbane property prices increased by just 3.5 per cent, and Darwin prices decreased by 5.9 per cent compared to the same three months of 2016.
"The ultimate solution to the affordability challenge is to make the delivery of our future housing stock easier and less costly. More flexibility in housing supply is the answer," Mr Garrett said.