Sustained recovery on the cards
The recent upbeat results have prompted some experts to declare the worst is over for Canberra’s property market
While Sydney and Melbourne have continued to hog the limelight, Canberra has been quietly making strides towards recovery.
The recent stats from CoreLogic RP Data show a rising market with median dwelling values climbing by 2.3% in the July quarter. Since the beginning of the year, property values have risen 5%, making the capital city the third best performing market behind Melbourne and Sydney.
“The housing market in Canberra has been on an improving trend,” says Tim Lawless, head of research at CoreLogic RP Data.
“The annual growth in dwelling values has been driven entirely by a rise in house values, which are up 1.4% over the past 12 months.”
Domain also recorded strong growth in buyer activity over the June quarter, continuing the significant momentum the city has experienced over the last 12 months.
“Canberra is certainly up and running,” says Andrew Wilson, chief economist at Domain.
“Canberra has now recorded three consecutive quarters of house price growth for the first time since 2009. The winter market has been the best I’ve seen for a very long time, and I think this has been building towards quite a solid market. Restored confidence in the local housing market is likely to result in increased buyer activity over the remainder of 2015.”
Despite the positive numbers, the apartment sector remains weak. According to the Domain data, the median unit price fell sharply by 6.3% during the June quarter.
“The recent high levels of apartment construction continued to push supply ahead of demand, with downward pressure on price growth,” says Wilson.
A new factor in play
According to Deloitte Access Economics, there’s another factor driving Canberra’s property market at the moment: asbestos.
It says 1,000 homes affected by asbestos are being bought by the Territory government and demolished at a cost of $1bn.
“That’s the equivalent of one in every eighty free-standing homes in the ACT. The need to rebuild that group of homes will add a new lease of life to housing. That explains why new building approvals which bottomed in late 2014, have risen rapidly ever since. It also explains why housing prices got a second wind amid a flurry of public sector job losses. And it is why we would expect rental vacancy rates to tighten,” Deloitte says in its Business Outlook
SUBURB TO WATCH
Bruce: Excellent amenities at an affordable price
Good luck finding a suburb with better amenities than the ACT gem known as Bruce. Located 6km northwest of the Canberra CBD, Bruce is particularly attractive to students, and has a median age of just 26 (11 years below the national average), according to the ABS. This is because the University of Canberra and the Canberra Institute of Technology are located in this suburb. They are also major sources of employment.
The other interesting stat is the median weekly household income of $2,080, which is $846 above the national average.
Bruce is a great suburb for sports enthusiasts as it’s home to the Australian Institute of Sport, the Canberra International Sports & Aquatic Centre, and GIO Stadium. The Calvary Hospital and Westfield Belconnen
are also nearby.
The supply and demand indicators are solid for this suburb, as there is 1.2% of unit stock on the market and its vacancy rate is 2.07%, according to DSRdata.com.au. And the average annual growth figure of less than 2% suggests investors could get in before a surge of growth occurs.
Two-bedroom apartments in the Thynne Street area can be bought for around $370,000. They are just minutes from the very best of Canberra’s education and sports amenities and not too far from the hospital and the major shopping centre at Belconnen.
Can you afford to buy in this suburb? Find out how much you can borrow
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