Canberra won’t be setting the national property market on fire any time soon, but it is expected to record steady growth over the coming years.
Real Estate Institute of Australia (REIA) president Adrian Kelly pointed to Canberra as one of the capitals that should see a moderate level of growth over the next decade, and according to CoreLogic’s Home Value Index for January 2020, Canberra was one of four capital cities that saw dwelling values hit a new peak recently, alongside Brisbane, Adelaide and Hobart.“
Canberra’s median house price is forecast to rise by 4% in 2020. If this eventuates, Canberra’s median house price will be around $820,000 by the end of this year,” says Domain economist Trent Wiltshire.
“Rising buyer interest, shown by a rebound in home loan commitments and a rise in views per listing on Allhomes, will support price growth.”
While the house market is going strong, there is less optimism for units. CoreLogic’s Pain and Gain Report for September 2019 shows that units were around six times more likely to sell at a loss than houses, due to the abundance of new supply in the pipeline.
“In recent years, there has been a relatively high level of newly constructed apartments in state capitals, especially across Brisbane and the ACT. This oversupply, which contributes to lower prices and higher vacancies, has impacted returns for unit resellers,” says CoreLogic head of residential research Eliza Owen.
It is anticipated that this increased supply will affect the rental market as well, as more stock will translate to a fall in rents due to vacancies.
“There might be some downward pressure on rents, although rental growth has been pretty consistent there for a while. Population growth is strong, but there is a lot of construction going on, and it looks like we’re getting lots of new apartments in 2020,” Wiltshire says.
With the balance between supply and demand being a crucial factor in determining growth, the unit projects in the pipeline could put a cap on increases in dwelling values. Affordability is another factor that could cause buyers to hit pause, as Canberra continues to record the third-highest median dwelling price among the capital cities.
SUBURB TO WATCH
FLOREY:
Despite not being the most inexpensive property market around, the Belconnen suburb of Florey experiences considerable demand from both buyers and renters that keeps it brimming with potential.
The median value of houses shot past the $650,000 mark as prices rose by 8.8% in the 12 months to February 2020, following a steady trend of positivity over the last five years. Unit prices dropped slightly, by 1.2% in the past year, but this may not be a major cause for concern as such properties spend an average of just 34 days on the market before being sold.
Meanwhile, rents are still rising, and rental returns are strong, at 4.0% for houses and 5.5% for units as of December 2019.
Growth: Both houses and units have recorded growth over the past five years
Rent: Rental rates increased in the year to December 2019, and yields are high
