Canberra still boasts one of the best capital city property markets in the country, second only to Hobart’s
Australia may be in the thick of a property market downturn, but the nation’s capital is cultivating one of the best markets of all the capital cities.
According to CoreLogic’s Home Value Index for April 2019, Canberra was the only capital city to record an increase in dwelling values over March–April, edging out even Hobart, which saw a price drop of 0.9% during the same period. This is indicative of the strong market conditions in Canberra, which also reported one of the highest annual gains in the country at 2.5%, just behind Hobart’s 3.8%. Canberra was also one of only three cities, alongside Hobart and Adelaide, to avoid a fall over the 12 months to April 2019.
Canberra’s positivity certainly stands out; however, the ACT government’s decision in 2012 to eliminate stamp duty over a 20-year period has been making its impact felt as well, with stamp duty revenue in the state falling over 2018. This decline is expected to continue as the national downturn runs its course.
Of the five districts in Canberra that had the highest price increases over the 12 months to April 2019, four were located around Belconnen and Gungahlin, while a number of the weaker performers were situated in affordable areas, notes CoreLogic research analyst Cameron Kusher.
“With dwelling values falling broadly across the capital cities, there are still some precincts where values are continuing to trend higher, although the list of positive growth areas has shrunk over the past year,” he says.
Flourishing economy
The convergence of several factors is keeping Canberra in its favourable position.
“It has a strong local economy that’s tied to government spending, employment growth, relative affordability and a short-term deficiency of housing stock,” says Geof Snell, principal property economist at BIS Oxford Economics.
Australia’s quick and significant population growth is supported by positive levels of net overseas migration, but Snell expects population growth levels to slow down.
“A positive policy towards net overseas migration needs to be sustained. Should there be any potential cuts, this could have significant negative implications for the housing market, having regard to the record supply still working its way through the development pipeline,” he says.
SUBURB TO WATCH
KAMBAH:
Sitting just south of Mount Taylor, the suburb of Kambah in Tuggeranong enjoyed reasonable growth in the 12 months to April 2019.
During this period, the median house price broke the $500,000 mark for the fi rst time in a decade. Nonetheless, properties are still reasonably priced. This, along with Kambah’s long-term growth potential, makes the suburb an attractive prospect for investors. Vendors are benefi ting from current market conditions, with average discounts of just 2.2% for houses and 2.0% for units.
The rental market is going strong as well. Rents increased by 4.2% for houses and 7.0% for units to reach weekly rates of $500 and $420, respectively. Yields are high at 4.8% and 5.3% on average.
Discounts: Properties in Kambah sell at low discounts of around 2%
Rental rates: Weekly rents soared over the 12 months to January 2019
