Canberra house prices are predicted to drop 5.4 per cent in total across 2026, according to a recent analysis by ANZ.
The big four bank also predicted the market will fall another 1.9 per cent in 2027, before ultimately bouncing back by 3.2 per cent in 2028.
The predictions for the ACT are in line with ANZ's forecasts for Melbourne and Sydney, which the territory has been following into a property slump since May.
In a new housing update this week ANZ economists Madeline Dunk and Adam Boynton lowered their expectations for the market from their June forecast following a faster and broader decline than expected in house values across the country.
"Since our last forecast update in June, the housing market has softened a little more than we were expecting," they said in their report.
"Sydney and Melbourne prices have declined slightly more than our forecasts, and prices in Brisbane and Perth have started falling earlier than we expected.
"It is clear the combination of restrictive interest rates, recent tax policy changes and global uncertainty have dampened sentiment in the market."
The combined capital cities are now expected to drop 4.3 per cent this year, and another 3.4 per cent in 2027, a 10.6 per cent fall from the market's peak.
While the smaller markets in Brisbane, Perth, Hobart and Darwin were all predicted to go up in value in both 2026 and 2028, ANZ has predicted a small downturn for each in 2027.
Despite the recent drop, homes values in the ACT still grew 1 per cent from this time last year, according to Cotality data.
The average home in the ACT is now worth $928,421, up $861,281 from July 2025, but down 4.2 per cent from the record high seen in May 2022.
Properties under $1 million had experienced an uptick at the start of the year as first home buyers took advantage of the federal government's 5 per cent deposit scheme extension, according to Cotality, but by the second quarter, even the cheapest houses were dropping in value in the ACT.
Properties in the cheapest 25 per cent of properties in Canberra dropped 1.6 per cent in the three months to July, while those in the top quarter dropped 2.7 per cent. Properties in the middle 50 per cent also dropped 1.7 per cent.
Canberra-based real estate agent Stu Hamill from the Agency said the ACT's dropping property market is only a "nominal cooling", but buying in the territory offers a number of benefits for first home buyers.
"For $800,000 to $1 million, you can buy a family home in Canberra that's within half an hour of the CBD. There's no other capital in Australia that offers that," Mr Hamill said.
"As long as they can afford the mortgage, it's a great investment for them and their families."
The extension of the ACT government's stamp duty exemption scheme was another factor which should appeal to first home buyers considering making the move out of the Melbourne and Sydney "rat race", Mr Hamill said.
"You've got great food, great lifestyle option. It's a great family experience here in Canberra," he said.
