It’s good to be a property owner in Canberra, says Australian Property Monitors (APM) senior economist Andrew Wilson. “It’s a very tight market and it’s getting tighter. Unemployment is 3%, and incomes are rising,” he says.
He notes that, while Canberra doesn’t have a prestige market, its middle to upper suburbs are strongly supported by civil service workers.
“They aren’t liable to fluctuations, which makes the market very stable. Therefore, I’d expect to see growth of 1–2% per quarter.”
Talk in recent times has been of slow land release and limited construction contributing to Canberra’s tight property market, but construction levels are on the up and Property Power Partners chief property consultant John Lindeman believes that Canberra could find itself with a surplus of stock in the coming years.
“There were 5,600 dwelling starts in the last year in the ACT. The net population growth is around 6,000 per annum, so they’re obviously building way too many houses and units,” he says. “So unless the demand increases dramatically over the next few years, I’d say that the ACT’s heading for an oversupply.”
“Developers are predicting that the past level of demand will continue, so we’ve seen huge numbers of unit blocks going up everywhere,” he says. “But unless the public service increases its population, there’s simply no need for that number of dwelling starts.”
For the time being, however, rental properties are in big demand, with APM reporting median weekly asking rent increases of 2.2% for houses and 2.4% for units during the March quarter.
Add this to SQM Research’s rental vacancy rate figure for March of just 0.4% (down from 0.6% in February) and it’s clear that Canberra’s landlords aren’t struggling to fill their properties.
Lindeman puts this rental squeeze down to Canberra’s transient public sector workforce. “There’s a huge amount of interstate arrivals and departures, and the reason for that is the public service,” he explains. “People are on two-year contracts. They come in and rent, and if they get an extension of their contract, they might buy.”
A swelling of international student numbers has also had its effect on the rental market, says Herron Todd White’s Month in Review report.
“With reports that universities in Canberra have had tremendous growth in international enrolments this year, vacancy rates continue to tighten, providing investors with continued solid rental returns,” says the report.
In terms of where to pick up an affordable property, the Herron Todd White picks out Queanbeyan, just over the border in NSW, where one- and two-bed dwellings are going for under $200,000 and $300,000 respectively.
Other areas to watch include Gordon
, new developments in Gungahlin
and older stock located in Bruce
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