Canberra rose as the breakaway performer among all capital cities during the first quarter of the year in terms of house-price growth, according to the latest report from Domain.
Over the quarter, house prices in the city increased by 9.7% to $927,577, striking the fastest growth rate since Domain records began in 1993. This was also the first time that house prices have cracked the $900,000 mark.
On an annual basis, house prices have grown by 19.5%, the steepest annual increase in 17 years.
Houses at the upper end of the market are leading, with the strongest quarterly gains recorded in North Canberra, South Canberra and Woden Valley. All these areas have a median above $1m.
"A higher average wage, job security and low mortgage rates have spurred buyers to upsize," the report said.
The report predicts that a similar quarterly growth could push house prices across Canberra to hit $1m. This, however, is unlikely to be sustained in the following quarters.
"This level of quarterly growth is normally the output of an entire year and is extremely rare for Canberra to experience in one single quarter. A lack of houses for sale at a time of strong demand has ultimately created stiff competition between buyers, depleting overall stock to a multi-year low," the report said.
On the other hand, the unit market reported a decline of 5% in prices over the quarter to $473,304. On an annual basis, unit values are still 2.8% higher.
"It has been a consistent Canberra trend, units providing more subtle growth compared to houses. The unit market is not uniform across the territory, with apartments in Gungahlin, South Canberra and Tuggeranong growing over the quarter and year," the report said.
The record-low interest rate, high household savings, low stock volumes, and government incentives are fuelling the strong demand in the overall dwelling market, the report said.