The ACT’s property market has been on a rollercoaster ride over the last 18 months. But does an improved end-of-2013 result mean that ride is finally over?
Sitting at the centre of every amusement park, the dips and turns, peaks and troughs of rollercoasters are much beloved by thrillseekers.
However, the dramatic rises and falls that characterise a rollercoaster ride are not so thrilling when they encapsulate a property market.
According to APM’s Andrew Wilson, the ACT’s market has been on a real rollercoaster ride in house price growth over the last 18 months. He says that, economic issues largely deriving from the territory’s heavy exposure to the public service, mean it has been very volatile with big fluctuations in buyer activity.
In 2012, the Canberra market was showing signs of becoming a leading capital city market. However, the 2012 budget – which brought in ongoing changes and cuts to the public service – has had a significant impact on unemployment rates, job security, and buyer confidence. This has, in turn, had an ongoing impact on the property market.
The good news is that the ACT market recorded a decent result over the December quarter, Wilson says. The latest APM housing market report shows that Canberra produced a modest performance through 2013 with median prices rising by about 3%.
Prior to that result, it looked like Canberra’s market would be the only capital city market to finish last year in the black, Wilson says. “This was due to end-of-year growth, which has led to a return to a positive outlook for the market. The result also reflects lower interest rates and improved affordability.”
While Wilson believes the positive frame of mind this denotes should work its way through the first half of 2014 and break the market’s recent rollercoaster pattern, he also warns that a lot depends on the first Abbott government budget.
“There is the sense that the budget will be a bit heavy handed in terms of fiscal consolidation, which will act as a moderator on housing market activity. The prospect of job cuts is a big negative influence on the market.”
Public service cuts are more likely to impact on buyer confidence before they impact on actual housing market activity, in Wilson’s view. “I suspect the budget might add to market volatility, rather than putting it into an underlying decline.”
However, he adds that low interest rates should continue to drive buyers, as should the territory’s ongoing under-supply of housing. This shortage keeps demand bubbling along underneath everything, counteracting some of the other issues affecting the market.
The latest Deloitte Access Economics Business Outlook’s assessment of Canberra reflects Wilson’s views. It says that Canberra’s economy is still in a tug-of-war between the positives associated with low interest rates and the negatives due to public sector cutbacks.
The report notes that housing finance and building approvals are falling, vacancy rates are continuing to climb, housing prices are heading down, and housing construction activity is sliding.
Further, it records that job vacancies have dropped to record lows, and predicts that 2014 and 2015 will be lean years for the ACT economy overall.
Suburb to watch: Lyneham
Attractive, leafy Lyneham is one of Canberra’s older suburbs. Its tree-lined streets and established gardens date back to the 1950s, and it also boasts the city’s second oldest church.
With a good mix of older heritage homes and modern townhouse developments, there is something in the suburb for everyone, Maree van Arkel, from McGrath-Dickson, says. “There are a lot of ex-government houses on 700m2 blocks, which are always popular.”
Located around 3kms north west of central Canberra, Lyneham has easy access to the attractions of the CBD. But it is also host to its own amenities – including schools, shops, cafes and restaurants.
Making the suburb even more desirable is a high amount of parks and bushland with walking trails and scenic views, along with a range of major sporting facilities.
These features mean Lyneham is particularly well-suited to, and popular with, families. However, its relative proximity to both the University of Canberra and the Australian Catholic University also make it a drawcard for students – thus ensuring a reliable tenant pool for rentals.
Van Arkel says that Lyneham’s ongoing gentrification is only going to increase its desirability. Meanwhile, with 6% growth in the last year and average annual growth of 5.2%, the suburb’s prices look well-placed to continue increasing.
