The Australian Competition and Consumer Commission (ACCC) said the proposed takeover was not likely to “substantially lessen competition in markets for online or print real estate advertising in the ACT”.
It noted that in comparison to its presence in other states, Domain is "a weak competitor in the ACT" and its market position was "unlikely to change in the foreseeable future".
The competition watchdog also said All Homes' presence was limited in the other states.
Clearance allows Fairfax to take possession of a company that serves more than 180 real estate agencies in the ACT.
The All Homes brand will be retained, operating in tandem with Domain in the market.
"Market enquiries indicated that aggregating Fairfax's print and online assets with All Homes was unlikely to change the current competitive dynamics," ACCC commissioner Jill Walker said.
"This is due to the dominant position of All Homes in the ACT and the decrease in circulation of The Canberra Times."
The ACCC said it had analysed confidential agreements between All Homes and real estate agents and determined there would be no restrictions following the deal that would prevent real estate agents listing on a range of competing websites, including realestate.com.au
"During the course of its investigation, the ACCC contacted a large number of real estate agents and other market participants, with a vast majority considering that the proposed acquisition would have little material impact on competition for real estate advertising in the ACT," Dr Walker said.