Just one year out from the next election, is the Canberra market about to benefit from a calm before the storm?
The Canberra property market is all too often held hostage by political fortune – ebbing and flowing thanks to the whims of those in charge.
Indeed, the winter lull saw average prices chilled to the bone, with the median dwelling price falling by 0.8% to $537,000, and the average house price dropping by 1.1% to $587,800 (as reported by CoreLogic RP Data).
However, early indicators suggest that Canberra could be on the cusp of a mid-term bounce, with auction clearance rates hovering above 70% throughout July and August (compared to around 50–60% this time last year).
In addition, new listings are increasing in the ACT – up 17.7% on 2014 – while total listings are down by 8%, according to a CoreLogic RP Data spokesperson.
“It seems that there is a level of confidence (or urgency) to bring new stock to the market,” added the spokesperson.
Domain chief economist Andrew Wilson suggests all this adds up to a sign of “upwards momentum” for the ACT.
“Canberra has been pushed around by budget cuts in the last few years, but this year’s budget has put a floor under confidence,” says Wilson.
“The auction markets are strong and clearance rates are up: it’s definitely in revival mode.”
Indeed, Wilson is happy to stick his neck out and say Canberra is “second only to Melbourne” in terms of upward momentum.
Supply and demand
There’s also another parallel with the Melbourne market, albeit not a pleasing one: the risk of oversupply in the apartment market.
Herron Todd White highlights “a significant number” of unit developments currently under construction or nearing completion in Belconnen, Central Canberra, Gungahlin and Woden Valley.
In addition, the Flemington Road corridor in both Franklin and Harrison could see the addition of a large number of residential apartments in 2015.
Herron Todd White warns that some developments may be delayed “until demand strengthens”, depending on pre-commitment sales.
Instead, Property Power Partners founder John Lindeman pinpoints outer suburbs as a safer bet to take advantage of the ACT’s legendary constraints on new land release, as well as the security of dealing with buyers and renters who are moving to Canberra for the long term.
Spring outlook
- Market conditions: Improving, with potential for limited growth
- Segments to watch: Outer-ring suburbs
- Segments to avoid: CBD apartments – potential oversupply
SUBURB TO WATCH
Charnwood: Affordable suburb with promising prospects
Charnwood has some enticing statistics for investors, according to OnTheHouse.com. au. These include the average rental yield of 5.5% p.a. for houses, and 5% p.a. predicted growth over the next eight years.
It is also affordable compared to its surrounding suburbs, with median house prices in Fraser, Flynn and Dunlop in excess of $470,000. Supply and demand indicators show that houses are in solid demand. They typically spend 64 days on the market, which is healthy for the ACT.
Moreover, the vacancy rate is 1.71% and there is only 1.35% of stock on the market, according to DSRdata.com.au.
Charnwood boasts a range of schools, parks and a shopping centre that is sought after by neighbouring suburbs. Upgrades have further improved the look of the suburb. Just 12km from the Canberra CBD, Charnwood is a particularly good choice for families. Its population of just over 3,000 is reasonably young, with a median age of 32, according to the latest ABS census.
There are large houses on North Place with lovely views of mountain ranges. Its quiet location close to Charnwood-Dunlop School makes it a great spot for families. Three-bedroom houses there can be picked up for around the $450,000 mark.
There are more affordable three-bedroom houses on Macqueen Place that can be purchased for about $300,000 and are close to the town centre and schools.
