Canberra’s median prices have taken a surprise hit in recent months, but APM senior economist Andrew Wilson believes that this road bump is a reaction to short-term economic conditions rather than a sign of a deeper malaise.
“Into the second quarter of the year we’ve certainly seen a weakening in median house price in Canberra, which is a little bit of a surprise given the dynamics of the market in so much as there’s been a shortage of housing in Canberra,” he says.
“But this is probably a reflection of subdued buyer activity in the shorter term – reflecting some weakening in economic activity.”
The good news is that the latest unemployment figures coming out of Canberra indicate that the city’s housing market is well positioned to ride out this recent speed bump. According to August figures from the ABS, Canberra’s unemployment level dropped by 0.9% over the month to reach a healthy 2.8%. The nationwide figure increased from 5.1% to 5.3% over the same period.
Wilson notes that the local unemployment rate affects the property market in Canberra more than it does in most capital cities and, with unemployment now almost matching the 2.4% low that it hit a year ago, things are certainly looking up.
“We’re maybe seeing some light at the end of the tunnel there,” says Wilson. “It’s fallen back by 0.9% from 3.7% to 2.8% so – on that basis – we would say that we are expecting a pickup and that confidence will rise.”
“The fact is that Canberra has an underlying shortage of housing, that there’s considerable competition for the housing that there is there, and it’s been like that for a while.”
In the meantime, REIACT President Michael Wellsmore notes that good properties are still selling well, albeit amid the backdrop of quiet buying activity that the ACT has been experiencing during the cooler months of the year.
“A house next to my own in the last few weeks sold above the auction price that they were expecting. But it was a good, well presented, property,” says Wellsmore.
“The clearance rates at the auctions are still down a bit, but we’re still getting clearance rate of about 70% in the week after the auction – just not on the fall of the hammer.”
As a sign of the continuing demand for property in Canberra, he notes that the Dockside project in the Kingston foreshore area already selling well, despite only being in the early stages of development.
“The $3m penthouses haven’t rushed off the plans, but anything between $800,000 and $1.2m or $1.3m seems to be selling well and they’ve only just started the project. So the Kingston foreshore continues to perform well as an area,” he says.
The ACT also remains the most affordable state or territory in which to buy a home, according to the latest REIA/Deposit Power Housing Affordability Report – a position that Canberra has held for the past five years.
According to the report, the proportion of income required to meet home loan repayments in the ACT is 18.8%. This represents an increase of 0.2% during the June quarter figure, and 0.8% over the past 12 months.
Canberra also came out on top for the largest quarterly increase in the number of new loans (17.7%) and the biggest rise in loans to first home buyers (25.6%). The ACT’s average home loan size increased by 1.6% over the same period.
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