House prices in the ACT have fallen for the first time since April 2025, according to Cotality's latest Home Value Index.
The 0.2 per cent drop in house values in May follows the trend set by the Sydney and Melbourne markets, which have both been experiencing consistent downturns.
However, Cotality's head of research Gerard Burg said that while the territory was following in the larger capitals' footsteps, it was unlikely to be as severe.
"At this stage it looks like it's going to be a little bit more moderate," Mr Burg said.
"It's not nearly as negative as we've seen in Sydney or Melbourne but certainly it's weaker than the national trend we're seeing."
In May, house values in Sydney dropped 1.1 per cent. In Melbourne they dropped 1.0 per cent.
Brisbane, Adelaide and Perth all saw prices rise due to higher population growth and lower stock availability, according to Mr Burg.
"There has been quite of a lot of stock available for sale in Canberra compared to a lot of other markets. Canberra's available properties for sale was sitting about 22 per cent above the five year average," he said.
"If you look at Brisbane, it's about 5 per cent below that average, and Perth is 26 per cent below."
The median house value is the ACT is now $890,555.
In last month's budget, Treasurer Jim Chalmers announced changes to the capital gains tax discount and negative gearing in an effort to level the property playing field and "give hope to future generations".
The capital gains tax discount will now be calculated on an inflation-based indexation, replacing the previous 50 per cent discount. Negative gearing, which allows investors to offset the cost of maintaining a rental property against other income, will be restricted to properties which are already negatively geared, or new builds.
Mr Burg said it was too early to see the effects of the budget changes to the property market. However, he said there had been a shift in buyer expectations following three successive rate rises, the last of which pushed the average Canberran's monthly mortgage repayment up another $131.
The buyer-side challenges were unlikely to let up in the near future, and softening demand would continue to push down house values, he said.
"How long that lasts for, and how deep, that's the thing that's uncertain," he said.
"We do note that of the 10 downturns in the past 40 years, just three of them have lasted for more than 12 months."
Apartment values in the territory also dropped 0.2 per cent in May, following a months-long trend which saw an overall shift of 0.0 per cent in 2025.
An "oversupply" of new apartment developments, as well as low investor interest has been blamed for the "broken" ACT apartment market.
Mr Burg said it was possible the changes to the negative gearing rules could flip the narrative on apartments in the ACT as investors move towards new developments.
"The longer term trend that we've seen over many years has been that most investors prefer to purchase existing stock, but we might start to see that shift as these policy incentives comes through," he said.
