Ups and downs are unfortunately a regular occurrence in the Canberra property market, and unless something opens up the purse strings, it’s going to be a long ride
Tough is a word that sums up the state of Canberra’s property market pretty well. House prices have fallen below the national average for the first time in more than three years. Strong growth in other capital cities is leaving the ACT lagging behind, and poor employment prospects have damaged market sentiment. It looks like it will be another flat year for Canberra’s property market.
The introduction of lower mortgage rates has had little effect on growth in home values. The latest CoreLogic RP Data Hedonic Home Value Index shows a 1.3% increase in Canberra’s dwelling values over the last month.
CoreLogic head of research Tim Lawless says lower interest rates may not stimulate the market as much as they have in the past.
“Weaker jobs growth, higher unemployment, declining affordability, low rental yields and political uncertainty are all factors that could dent consumer confidence and provide some counter balance to the rate cuts and quell any additional market exuberance,” he says.
A tightening of the Federal Government sector has seen a drop in interstate outflows and the rate of population growth. However, there are some positive indicators that Canberra’s outlook is not inevitably bleak.
Pros in the cons
Dwelling supply has been an issue in Canberra. BIS Shrapnel senior manager Angie Zigomanis says supply is running ahead of demand due to a strong uptick in apartment construction.
“A lot of that apartment construction is bought off a plan that is starting to come through now, so we’re also seeing an uptick in vacancy rates,” he says.
But recent developments in Australia’s higher education sector may provide an answer.
“The last 12 months we’ve seen a recovery in overseas demand at universities, and the Australian National University in Canberra has a decent component of overseas students on campus. That recovery hopefully should help to fill up some of those apartments.”
In terms of the dark cloud covering growth in home values, there is also a silver lining. The REIA Housing Affordability Report for the December 2014 quarter showed that ACT was the most affordable state in which to buy a home. Only 20.4% of the median weekly family income was required to meet mortgage repayments.
Market activity remains upbeat, with an increase of 8.8% in the number of loans over the December quarter.
High wages coupled with the low median house price mean Canberra is looking like a more achievable prospect for first home buyers.
In light of lower median house prices, Zigomanis warns that property investors shouldn’t assume they will make a quick buck in the current environment.
“If you’re looking to flip anything you bought recently, don’t really expect to get any capital gain on it. Potentially, if you’re looking to sell quickly you’re probably expecting a capital loss. Ride it out,” he says.
SUBURB TO WATCH
Chisholm: Forgotten corner of Canberra shows promise
Just 16km south of Canberra’s CBD sits the leafy, tranquil suburb of Chisholm. Although it is one of the most southerly suburbs in the ACT, it appears there are no trade-offs to pay for peaceful outer-city living. And with a vacancy rate of just 0.39%, many locals seem to agree with this perception.
Chisholm has excellent transport infrastructure. Several bus routes operate in the suburb, and with the Monaro Highway to the east, a drive to the CBD takes a mere 20 minutes. The area is particularly popular with families due to the wide variety of education and childcare facilities nearby.
The suburb’s main shopping centre is on Halley and Banham Streets. A supermarket, medical centre, dentist, restaurants, cafes and several other businesses provide for the local community. Chisholm is also less than six minutes from one of Canberra’s largest shopping complexes, the Tuggeranong Hyperdome.
Affordability is a key part of Chisholm’s allure. The suburb is much cheaper than neighbouring Macarthur ($605,000) and Fadden ($649,500). Four-bedroom houses perfect for families can be found on Goldstein Street, Barangaroo Street and Hambidge Crescent for under $465,000.
