The Canberra market has seen a flurry of activity in the lead-up to the end of the financial year. Luton Properties principal Richard Luton explains the city’s unique land and tax laws have come into play.
“Because of the leasehold on our land, investors are able to claim back a certain percentage of their stamp duty as well as other outgoings when purchasing an investment property,” he explains.
REIACT president Michael Wellsmore says that Canberra’s property scene is currently underpinned by an undersupply of stock.
“We don’t see that being rectified any time soon,” he says. “And some of the recent announcements by the government will see a downturn in the amount of redevelopment activity.” These recent announcements relate to the city’s change of use – or ‘lease variation change’ – charges, which are levied when a developer amalgamates a number of old blocks to build a unit project, for example. “It used to be in the order of $5,000, but now they’re looking at $20,000 to $50,000 – or even more,” says Wellsmore.
He expects that these rule changes will dampen development activity in the unit market in particular, and notes that those developments that are going ahead are proving to be popular with buyers.
“The largest project underway is called Manhattan, which is 350 units in the city adjacent to Reid Park. They’re at 90% pre-sales already, and they’re still only at the stage of pulling down the old commercial building that was there.”
This is symptomatic of the popularity of inner-city areas, says Wellsmore, as well-heeled Canberrans are choosing to live close to where they work and play. He cites areas such as Woden, Phillip, Dickson and Lyneham as some of the city’s stronger markets.
RP Data senior analyst Cameron Kusher points out Canberra’s house prices are now higher than Sydney’s, potentially turning buyers away.
“The median house price is now $560,000,” he says. “Wages are very high, but people might think that they’re better off renting.”
Whatever the case, Canberra’s rental market continues to be tight. As transient workers and hesitant buyers battle it out over the available rental stock, the city’s vacancy rate is a tight 0.7% according to SQM Research.
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