As Australia’s capital and political centre, Canberra remains one of the country’s most stable markets heading into the new decade.
“Over the last three years, the nation’s capital produced the second highest price growth out of all capital cities, behind Hobart. Demand has been driven by a boom in overseas students, a strong tourism sector and a lift in employment for white-collar professionals,” explains Simon Pressley, managing director of Propertyology.
Herron Todd White’s Month in Review report for December 2019 notes that buyers seek out houses situated on large blocks of land in established suburbs that are in close proximity to good schools and jobs.
This increases the chances of an investor making a profit from rental returns in areas with low vacancy rates, while still being able to expect growth. Premium properties are being sought out as well by investors looking to expand their portfolios. Canberra’s resilience during 2019’s national downturn seems to have proven its stability.
“Canberra’s housing market remained relatively resilient to falling prices through 2019, with the market down only 1.5% for a brief period between April and July. Since then, Canberra housing values have bounced back by 4.0% to reach a new record high in November,” says CoreLogic head of research Tim Lawless in his outlook report for 2020.
“Considering the strong backdrop of economic and demographic conditions, we are expecting dwelling values in Canberra to continue trending higher in 2020, likely at a similar pace to what we have seen in 2019.”
However, the availability of supply could be a concern for Canberra, as activity in the medium-density market has already felt its impact.
“We are concerned for Canberra’s apartment market – a staggering 63% of all dwellings approved in Canberra over the last 16 years were for attached dwellings,” Pressley points out.
With Canberra’s prices what they are – a median of $611,841 as of the three months to November 2019 – this could have an effect on the market’s performance in 2020. Nonetheless, the city’s economic strength is likely to pull it through, as well as the lower interest rates nationwide.
In Knight Frank’s 2020 Outlook Report, chief economist Ben Burston says, “As a result of a sharp downward shift in interest rates and the prospect of further RBA action, we expect the investment market will drive to new highs in 2020.”
SUBURB TO WATCH
NGUNNAWAL:
In the Gungahlin suburb of Ngunnawal, the house market continues to enjoy positive growth. Although the growth rate slowed in the 12 months to November 2019, house prices increased by 30.5% in the last fi ve years, bringing the median value to $534,856.
While the unit market also saw growth in that period, values did fall by 4.3% in the year to November, pulling the median price down to $413,763. Nonetheless, the average discounts in both markets were low at 2–3%, indicating that vendors don’t have to compromise too much to make a sale.
Units take the lead when it comes to the rental market, with rental rates increasing by 7.1%.
Discount: The average discount for houses and units is just 2–3%
Rent: Rental rates for units rose by 7.1% in the last year
