While other parts of the country sweat on big-ticket issues such as the lingering effect of the GFC, the impact of this year’s natural disasters and whether planned resource investments will come good, Canberra’s sticking to a familiar script of stable growth backed by strong economic fundamentals.
“Canberra’s not a bad market now,” says APM senior economist Andrew Wilson. “There’s a shortage of supply and a competitive job market, and that could cause further price growth.”
The Access Economics Business Outlook report agrees that Canberra’s jobs market is strong, and that the huge demand for property in the ACT has led to an “astonishing” upswing in housing construction.
“The surge in housing construction saw new home starts almost reach their early 1990s peak. This burst of activity hasn’t yet run its course as improved land release eats its way through pent-up demand for housing. Consumer spending is looking solid, while population growth has matched the national rate for the first time in a while. Also, job gains have been excellent,” the report says.
Canberra’s improved levels of land release have led many investors to snap up new opportunities in planned residential developments, says Real Estate Institute of ACT president Michael Wellsmore.
“Seventy per cent of these multi-unit projects are going to investors. The newest areas are Crace, Casey, West Macgregor, Forde and the newer area of Bonner. They’re all doing well. There’s very little that’s not sold when finished.”
Wellsmore also advises investors to keep an eye on the new town centre at Gungahlin, but especially the recent land release area of Molonglo.
“That’s a new area which is close to major arterial roads, services and hospitals, so it’ll be an area to focus on,” he says.
Wellsmore says another issue of interest to investors this year is the conclusion of a local government review into zoning legislation. Change of use charges have made it costly to redevelop existing stock, but the results of the review could see a flurry of investor activity in the inner city.
“If you have a single block of land and you want to make it into multiple units by joining a number of blocks together, then there is a change of use charge. That has been going through a review since March 2010,” he says. “I’d suggest people keep an eye on the inner-north and inner-south areas. The demand is going to be higher, but the product availability is going to be less because of the changes that the government is going through.”
Despite this upbeat outlook and assessment of the Canberra property market, John Edwards, CEO and founder of Residex, remains cautious.
“I think it’s in oversupply, perhaps by about 4,000 houses. Affordability isn’t dreadful, but it’s not good. It’s certainly better than Melbourne and Sydney. The medium density unit market has stabilised, but perhaps a correction is occurring with houses.”
As such Edwards expects growth to rise in line with inflation. “I’m not expecting anything significant, it depends on how the government goes and how long it stays in power,” he says.
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