Still going strong
The federal capital continues to grow thanks to government investment in the public sector.
Canberra has proved to be a formidable opponent during the global financial crisis. While other states have suffered, ACT has soldiered on and remains a top performer.
RP Data reported growth of 8.1% for the first 9 months of 2009 and yields of 4.7% on houses and 5.9% for units. "These are not figures to be sneezed at," says senior research analyst with RP Data, Cameron Kusher. "Across the nation yields have softened a bit but Canberra is doing quite well and the public sector is a big factor in that. There were some job cuts but now the economy is turning around there will be more opportunities opening up."
According to Marcus Hon, CB Richard Ellis Canberra associate director, valuation and advisory, all levels of Canberra's market is performing strongly - and, unlike other state markets, has done so for the last year. "The entry level market is still very strong, the middle market is tapering off and the prestige, $2 million plus market, is still steady and strong," he says. "We're very employment driven - we have low unemployment rates, high wages and limited stock. Going into 2010, even with another interest rate or even two more, I think the capital growth will come back and I don't see it going below 10%."
Hon says suburbs within the Woden district, south west of the CBD, will perform well into 2010. The district, which includes Curtin and Torrens, has a Westfield shopping centre, a hospital, and good schools and is less than 10k to the CBD. Hon says older houses will see decent capital growth.
He also highlights the inner north and inner south of the city. "They have always performed well even in a depressed market because they have a strong demographic: professional families, double income and high net individuals so when the market goes bad they don't have to sell up. "
In response to the rapid population growth, a number of infrastructure projects are under development. The two major projects are the $350 million development of Canberra Airport and upgrading infrastructure in the northern suburb of Gungahlin - a direct response to the growth in the region.
The projects suggest a turn around from the state - the airport terminal development was initially put on hold for four months due to the financial slow down and since restarted, it is expected to create 300 construction jobs onsite and 950 jobs off-residential.
The 2009/2010 budget will inject $274 million into Canberra through the Capital Works Program - a scheme that helps councils meet the social, economic and infrastructure needs of the community. A large proportion of this is set aside for work in the Gungahlin district, including a new college, library and parkland. The Sustainable Transport Action Plan 2010-2016 - which reviews pedestrian and cycling infrastructure - will also benefit the suburb.
Currently, Gungahlin isn't performing particularly well - according to RP Data's September 2009 reports houses in the suburb showed 0% quarterly growth, while units showed 6%. However, there were 104 house sales in the suburb that month, compared with just 79 in neighbouring Amaroo so the area could perform better over the next 12 months.
"Gungahlin is where all the new land is at the moment - geographically we can't grow anymore land apart from in north so the government is pushing that area," says Marcus Hon. "It is predominantly three-bedroom ensuite houses for sale there and there are probably less than a dozen multi unit developments."
Hon says three-bedroom houses start at around $400,000 and units at $300,000. Despite the limited supply of units, they are no more desirable than houses. In fact, the chronic undersupply in Canberra means anything is hot property. "The rental market here is ridiculously strong so it doesn't really matter where you buy," says Hon. "There is a chronic undersupply here so whatever you buy will be filled quickly."
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