Growing economy moves Canberra forward
Now that Sydney property prices have put this city out of reach of the majority of buyers, is Canberra the new investment destination to watch?
Indeed, property prices are on the up and up in Canberra, with CoreLogic’s October 2016 Home Value Index lauding Canberra as the top performer among the capital cities.
Cameron Kusher, head of research at CoreLogic, indicates that Canberra’s recent growth has been buoyed by high demand and constricted supply, as the number of new listings have gone up by just 0.3% compared to 2015.
In particular, the house market recorded 8.2% growth over the past 12 months, making houses the property type of choice for buyers; on the flip side, the median unit price increased by 3.2%.
In terms of rental yield, units offer greater returns to investors, at an average of 5.1% compared to 4% for houses. Canberra’s growing popularity is also reflected in the shortened amount of time properties remain on the market – the average as of November 2016 was 35 days, compared to 44 days at the same time in 2015. Canberra is expected to sustain this momentum going into the 2017/18 period.
Commercial efforts could sustain the market
Richard Robinson, senior economist at BIS Shrapnel, attributes Canberra’s rise to property market prominence to an increase in government spending following the end of the austerity drive.
Furthermore, infrastructure projects are anticipated to help this capital hold its position going into 2018. “A key driver of growth will be a boom in private non-dwelling construction next two years, led by the Light Rail and electricity projects,” Robinson says.
Eliza Owen, market analyst for OnTheHouse.com.au, also points to population growth as a reason why Canberra is the third-best-performing capital city in the country.
“There has been a slight uptick in job vacancy and migration over 2015, with movements in net migration following job vacancy at a lag. Increased migration to the ACT may partially explain higher sales volumes in houses,” Owen states.
SUBURB TO WATCH
Bruce: Unit values rise in university-focused suburb
In the suburb of Bruce, the house market is faltering slightly in contrast to Canberra’s general upward growth trend.
After a strong growth pattern observed over the past five years, house values in Bruce slipped by 3% in the past 12 months, although this trend seems to have slowed in the November 2016 quarter. Despite this decline, with Canberra’s present upswing it could still be a good time to invest in this suburb, especially while prices are low.
By contrast, the apartment market saw a slight jump of 0.7%, while maintaining a high rental yield of 5.1%. This increase could be attributed to the suburb’s popularity with students.
This fairly new suburb is home to sports facilities such as Canberra Stadium. It also houses several universities, including the University of Canberra and a branch of the Canberra Institute of Technology.
Can you afford to buy in this suburb? Find out how much you can borrow
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