Low interest and unemployment rates continue to underpin the ACT property market
Canberra has been pinpointed as a capital with high potential for growth throughout 2016, driven by the state’s strong economy and pockets of affordable housing.
Gareth Aird of Institutional Banking & Markets notes that the unemployment rate in the ACT is expected to stay below the national average given that the state has already been through the majority of the federal public job cuts.
Moreover, demand for properties has increased recently with the removal of homes contaminated with Mr Fluffy asbestos.
The Herron Todd White Month in Review report for June 2016 suggests this increased demand is one of the factors contributing to the anticipated tightening of this residential market in the short term, along with the current stock of homes and declining dwelling commencements.
Rising rents
To accommodate the heightened demand, home building approval numbers increased by 6.8%, reports the Housing Industry Association. Further strengthening the city’s case as a strong investment market is the fact that Canberra rents are rising, in contrast to the national average, which is dropping.
In response, investors have tightened rental conditions for tenants.
“The market appears to have absorbed the surplus supply of units and apartments,” says Nicola Powell, data analyst at Allhomes.
“This year has seen a substantial reduction annually in the number of new properties to hit the market. Shrinking stock levels and a relatively consistent demand level has created the perfect conditions for price hikes.”
While house prices in the state have gone up in general, “small segments of the market, including units along the Flemington Road corridor in Gungahlin, are expected to remain soft”, the Herron Todd White report states.
The same is true for homes with less ideal locations and inferior accommodation, although the construction of the new light rail in Canberra may help alleviate this problem in areas like the Northbourne Avenue Corridor.
SUBURB TO WATCH
Macgregor: City suburb benefits from its neighbours
The suburb of MacGregor is favoured by many investors due to its proximity to the city and low unit prices. Investments here certainly pay off, as the average rental yield for units is a strong 5.6%.
Given the demographic of the residents in MacGregor – namely young adults – many are likely to be working in the nearby suburb of Charnwood, or in Canberra. There are several bus routes going to and from the city to service these commuters.
Ginniderra Creek flows through the middle of the suburb and is a beautiful natural local attraction. An oval has been constructed for community activity, as well as a swimming school.
MacGregor is also home to a primary school, while shops, chemists and bakeries are located in the surrounding suburbs of Holt, Charnwood and Belconnen. All of these suburbs are approximately 10 minutes away or less from Macgregor.
