Canberra remains the country’s most unaffordable housing market, with sellers asking around $538,000 more than what buyers are searching for, new Domain research shows.

The Domain Matching Demand Report, which compares buyer price searches with property listings, found Canberra remained the most stretched market despite the gap narrowing over the past year as buyer budgets increased and listing prices fell slightly.

Canberra also remains the most expensive inner-ring townhouse market relative to buyer budgets nationally, with sellers now asking around $400,000 more than buyers are searching for, up from about $300,000 a year earlier.

South Canberra recorded the largest gap for houses, with listings $848,750 above buyer searches, followed by Molonglo at $400,000, North Canberra at $272,500 and Woden Valley at $149,000.

The picture was reversed in several districts, with buyers searching above listing prices by $100,000 in Weston Creek, $66,550 in Belconnen and $50,000 in Tuggeranong.

Canberra also had the country’s largest inner-ring house seller premium and its most expensive inner-ring townhouse market relative to buyer budgets. The townhouse gap was about $400,000, up from about $300,000 a year ago.

Domain chief residential economist Nicola Powell said softer housing conditions had not been enough to bring detached houses within reach of many buyers.

“What’s notable is that we’re still seeing a significant gap between buyer budgets and listing prices, despite softer market conditions,” she said.

Nationally, the report found buyers were increasingly changing the type of property they searched for rather than moving further from city centres, with townhouses and apartments more closely aligned with buyer budgets than detached houses.

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