When it comes to the Canberra property market, bad news dominates, but investors are urged not to overlook the positives as well
If you’re looking for rosy forecast for Canberra, you’d be sorely disappointed. Experts are unanimous with their view that it will be another flat year for the country’s capital at best. At worst, there will be a decline in property values over the next 12 months.
The latest CoreLogic RP Data Hedonic Home Value Index certainly confirmed this view – its results showed that Canberra was the weakest performing capital city during the three months ending December. While every capital city rose, Canberra and Darwin were the only ones that saw a drop in property values during the same period.
Median dwelling values plunged 3.4% in Canberra, while Darwin fell by 1.7%. Canberra is also the only capital city that recorded negative growth during the 12 months ending December.
“There is not a lot of good news coming out of Canberra at the moment,” says Andrew Wilson, senior economist with Domain Group. “The market has been the underperformer this cycle, since the beginning of 2011. I think we’re in for another flat year,” he says. “There are roadblocks everywhere. The government has nowhere to run but to cut costs, and that means cutting jobs – not good news for Canberra.”
The positives behind the bleak economic numbers
While it’s tempting to pronounce the demise of Canberra’s property market, it would be wrong to suggest that it’s all downhill from here, considering the strength of the local economy.
For example, while the ACT has the weakest job market in the country with the unemployment rate at 4.9%, the territory is still lower than all other states except NT (3.6%). ACT also has some of the highest wages in the country, so affordability remains relatively good.
“Affordability is still good in Canberra,” says Wilson. “It’s still got a low unemployment rate, relatively speaking, but it’s just high in Canberra’s standard. It will mean people are still going to buy houses, and we’re still going to see price growth, but it’s coming off the bottom. At the moment, there’s no sign of relief in terms of the federal budget, so things are looking bleak.”
ACT is also the third fastest-growing economy in the country behind NSW and WA, racking up growth of 2.5% during the past 12 months.
There has also been some material improvement in the housing finance, and population has grown a solid 1.2% in the 12 months ending June 2014.
SUBURB TO WATCH
Macquarie: Canberra’s quiet achiever
Macquarie benefits not just from its proximity – only seven kilometres – to the Canberra CBD, but for all the excellent amenities its residents have access to. For one, it has a major shopping centre, the Jamison Centre, which provides a fantastic selection of shops and services.
Nearby the Jamison Centre is one of Canberra’s only waterparks, the popular Big Splash Waterpark. It has recently benefited from the implementation of new rides from the Gold Coast valued at $1.5 million.
Add to that Macquarie’s great schools, parks and its bus network, and you can see why families are drawn to this suburb.
Furthermore, it’s right next door to Westfield Belconnen and the Belconnen Town Centre. Then there’s the fact that the University of Canberra, the Canberra Institute of Technology, the Australian Institute of Sport and the Canberra Stadium are all conveniently located in the neighbouring suburb of Bruce.
It may have only grown by 3% in the last 12 months, but the features in and around this suburb are continuing to draw buyers, which should only help increase capital growth over the medium to long term.
In particular, quiet cul-de-sacs near Macquarie Primary School are perfect for families. These include Clint Pl, Moy Pl and Ulva Pl. There are spacious three- and four-bedroom houses onlarge blocks there valued around $500,000.
