Canberra medians are pressing relentlessly forward, but value opportunities offer investors southern comfort
Quarterly price indices from multiple data providers show growth in Canberra property remains strong, with marginal increases recorded even as other capitals struggled. But there’s more than meets the eye.
A closer inspection of markets within the ACT shows growth is not as evenly spread as first thought. While the Australian capital is immune to a lot of price fluctuations thanks to robust medians in the lower end of the market and plenty of pressure in the middle, a number of suburbs have been bucking the trend with recent declines.
Over the 12 months to August, units in Canberra’s southern regions, incorporating a cluster of suburbs that includes Lyons, Hughes and Red Hill, as well as further south, Chapman and Fadden, have recorded negative trends.
According to RP Data, Chapman had the worst of it, with an 18% plunge, while Fadden dropped 15% and Lyons and Hughes both slid by 10%. This was a severe turnaround in fortune for Lyons and Hughes especially, where average annual growth over the past decade was 12% and 15% respectively.
Investigating the price falls
APM senior economist Andrew Wilson says traditionally, a number of market factors work together to keep Canberra property prices afloat. One of them is that a limited release of housing stock ensures buyers pay a premium for ACT properties. “The city has historically had problems with land release, driving competition for properties that are scarce,” he says.
Not surprisingly then, in all the southern Canberra regions that have seen massive price falls, the opposite has happened – an unusually high amount of stock has been released onto the market. For Lyon, Real Estate Investar data shows that in August there were 200% more listings than the year before, while in Red Hill reported a 75% surge in listings.
The Real Estate Institute of Australia’s ACT president Craig Bright says these price falls should be seen as an opportunity more than anything else. “It is a fantastic time for anyone wanting to live closer to the city to upgrade their home,” he says.
He points out the areas that have fallen the most in recent times still hold a lot of demand from residents.
Real Estate Institute data shows any sharp increases in the number of listings that have occurred are temporary, with population growth strong and building approvals having fallen across two consecutive quarters. Residential building has fallen 3.9% since December 2011, while the value of total building work has fallen 2.8%.
The fact that the ACT economy continues to strengthen is further evidence that only a short window of time exists to take advantage of any price falls.
“Even though ACT job-shedding was announced in the federal budget, that has not impacted the local economy,” says Wilson. “Canberra is the first city according to our figures that has recovered and moved beyond its previous median price peak.”
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