Investors drive Canberra's rent
Canberra is fast becoming an expensive city for tenants. Findings presented in the Domain Rental and House Price report released in February 2017 suggest that the rate of increase in rent rates in Australia’s political centre was the highest of all the other state capitals.
Factors playing into this upswing include development efforts, political stability and greater job security for those working in government. In fact, wages have been high, but the increased rental cost still puts a strain on tenants.
For Nicola Powell, data scientist for Allhomes, this rise is indicative of a resurgence in investor activity.
“As affordability becomes stretched, some tenants will be forced to move elsewhere in search of a lower price point,” Powell explains.
“Tenants need to brace themselves for further potential hikes in rent. Vacancy rates remain low, indicating that more rental rises could be possible, pushing the journey to home ownership even further out of reach.”
Consumer demand drives approvals
Despite the blow to tenants in terms of rental hikes, Canberra’s property market in general offers a rosy outlook.
“Canberra has seen value growth lift over the past year, and with the improving economic conditions and a tightly managed supply of new housing, it may actually see an acceleration in value growth throughout 2017,” notes Cameron Kusher, senior research analyst at CoreLogic.
Ken Morrison, chief executive of the Property Council of Australia, adds that the ACT is one of two states in which he does not “see industry concerns about the state government performance, in terms of planning and managing growth.”
Indeed, infrastructure projects are currently underway to add to Canberra’s appeal, as described in Herron Todd White’s Month in Review report for February 2017. The construction of a light rail system will add another public transport method that connects metro suburbs such as North Canberra to the CBD, adding value to these areas.
Undersupply is another factor in the soaring of ACT prices, although this may be alleviated soon by the recent boost in housing approvals. The apartment market is growing considerably in Gungahlin, Belconnen, Molonglo Valley and Tuggeranong, although it does inspire concerns about unit oversupply in these pockets.
SUBURB TO WATCH
Evatt: A strong house market defines this Belconnen suburb
Situated roughly 20 minutes’ drive from the capital of Canberra is the suburb of Evatt, where detached houses have become quite popular over the decade.
Prices peaked at nearly $570,000 over the past 12 months, following 12.6% growth. While the unit market has been declining slightly over a five-year period, rental yields are still high at 5%.
The suburb’s central location in the Belconnen district supports its growth, since the region has been experiencing a rise. Evatt provides many conveniences and amenities, such as ovals and primary schools, and neighbouring suburbs like Melba and Spence are home to secondary schools, sports facilities and shopping centres, and Westfield Belconnen is located just over 5km away by car. Regular bus services to the city are also offered.
