Low supply slows housing activity
Canberra reported the secondhighest growth rate of all the capitals over the September 2016 quarter, below only Melbourne and above Sydney, according to the CoreLogic Hedonic Home Value Index.
In fact, over the month of September 2016, Canberra was the top performer in the country in this regard. The auction market was looking strong as well, with the capital recording a high clearance rate of 72%.
With such strong market indicators, why aren’t buyers flooding Canberra? According to Nicola Powell, property expert at Allhomes, the buyers are there; it’s the supply side of the equation that has not been increasing as expected since the spring season.
“The rising auction activity is a sign buyers are competing at auction, driving up auction clearance rates. This indicates that slow housing activity is not necessarily [due to] a lack of active buyers in the market; it is the lack of stock and shortage of new listings,” Powell says.
Townhouses, units top choice
While there has been a decline in the number of houses sold in Canberra, sales of townhouses and units went up by 15.1% annually. Stock of the latter also increased by 2.5% over the month of September 2016.
A good supply of properties in the medium-density market keeps buyers on their toes in Canberra’s inner-north and inner-south suburbs.
Buyer activity hasn’t died down either in the suburbs located at the fringe of Canberra; standard housing at entry-level price points is seeing quite a bit of interest.
Because affordable suburbs have a low entry point and the prestige market has a high entry point, Andrew Wilson, chief economist at Domain Group, sees Canberra as a tricky market.
“When the market rises, it rises as a whole,” Wilson states.
Hence, most suburbs in Canberra continue to report growth, buoyed by the performance of prosperous pockets.
“It’s a changing landscape. In the past, developers have provided a high percentage of small apartments targeting investors, but investors are oversupplied in those sorts of apartments. Developers in Canberra are pretty savvy and they’re adjusting their mix to meet demand.”
SUBURB TO WATCH
Macquarie: Unit market is on a roll in Belconnen suburb
Situated 9km northwest of Canberra, past the Black Mountain Nature Reserve, the suburb of Macquarie is looking at a fiery unit market. More and more apartments are being constructed as they appeal to downsizers, and apartments are expected to become the predominant type of dwelling in this suburb.
This market saw an increase of 10.7% over the past 12 months, with a high yield of 5.1% for investors. This may be due in part to Macquarie’s proximity to the capital and the presence of the shopping hub, Jamison Plaza, which is convenient from both a work and play perspective. Buses run daily from the suburb to Canberra.
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