The Real Estate Institute of the ACT has warned of an artificial price boom with hundreds of Mr Fluffy families looking for new homes following confirmation of a buy-back scheme.

The Commonwealth will provide a $1 billion concessional loan to the ACT to enable the government to buy back and demolish all 1021 Mr Fluffy homes within the next five years.

The homes will be purchased at full market value as though they were not affected by the remnant loose-fill asbestos.

Affected home owners will be able to sell their homes back to the government as soon as January.

Real Estate Institute of the ACT chief executive officer Ron Bell said the decision would have an impact on the housing market with potentially hundreds of families looking for new homes.

He said it was unlikely to represent the boom that the territory experienced following the bushfires because of the lengthy time period but a lack of stock could push up prices.

"If we didn't have a good stockpile of properties to purchase, and we don't, and all of a sudden you had 200 families looking for a property … you could have an artificial boom," Mr Bell said.

He said unless the ACT government's Land Development Agency made more land available there would not be appropriate diversity of stock on the market.

The market is flooded with apartments, Mr Bell said.

The institute generally welcomed the decision on the buy-back scheme but was disappointed the federal government would not share the cost of the program.

LJ Hooker Manuka principal Stephen Thompson said the decision would have a major effect on the market with prices expected to rise from the time the scheme began.

He said there was already about 500-1000 fewer properties on the market than there usually were at this time of year.

"We're going to see a major increase in prices," Mr Thompson said.

"Stock levels are going to be drying up because we're going to have a strong spring."

Peter Blackshaw Manuka principal Andrew Chamberlain said the scheme had the potential to cause a spike in property prices with double the number of homes affected than after the bushfires.

"Anything that is an abnormal influence on the market will generally give it an artificial push in one direction or other," he said.

Mr Chamberlain said while devastating news for many home owners the decision would benefit the local economy.

Master Builders Association of the ACT executive director John Miller said it was good there was now a clear indication of a resolution for home owners.

He said the industry was well-prepared for the demolition and rebuild work needed over the next five years.

"Obviously it's a local problem and industry here is looking at providing a local solution," Mr Miller said.

Housing Industry Association executive director ACT/Southern NSW Neil Evans said compulsory acquisition was not the right move for the territory.

"It seems to me that they've got this fixed mentality where they want to demolish suburb by suburb," he said.

"My concern is that they'll run into a lot of problems and they'll need to be flexible.

"A lot of situations will prevent mass demolition suburb by suburb."

The Canberra Times revealed earlier this year that Mr Fluffy homes were spread in about 70 different suburbs in the territory with the most heavy concentration in Pearce, Kambah and Curtin.