Low unemployment, a strong economy and stable housing activity have created fertile ground for the Canberra housing sector, with a promising outlook for the rest of the year
With strong fundamentals propelling it forward, the Canberra residential property market is performing well in 2010.
Australian Property Monitors’ recent House Price Report notes that the median value of houses and units rose by more than 13% over the year to March 2010. “[A] slight pause in unit price growth still leaves Canberra with the second highest annual growth rate in the country,” the report adds.
Residex figures are a little more restrained, recording 10.96% and 10.37% annual growth for houses and units, respectively. Median prices now stand at $507,000 for houses and $404,500 for units in the nation’s capital. Weekly rental returns are now sitting at around $450 and $400 for houses and units respectively, equating to yields of 4.63% and 5.16% in the capital as at March 2010.
ACT economy nabs top spot
The ACT has won the top position on the Australian economic leader-board, a position it previously shared with Western Australia.
CommSec’s April Economics Insight survey tags the ACT as the best-performing economy in the nation. In the previous study, conducted in January, ACT and WA were equally ranked in first position, yet the territory’s strong housing and construction activity has driven economic growth and kept unemployment at historically low levels.
“The strong performance of the ACT economy highlights the value of having a powerful growth driver,” notes Craig James, chief economist at CommSec and author of the report.
Access Economics’ recent Business Outlook report explains that a reasonable release of land has allowed new house and unit developments to sprout across the territory.
“The ACT has benefited from being one of the earlier jurisdictions to recognise the need to increase the pace of land release. Doing that allowed the ACT’s housing construction sector to swim strongly against the national tide with activity strengthening remarkably, up by more than 40% through the course of 2009,” the report says.
“Housingconstruction in the ACT sprinted through the course of 2009 – a marvellous and much-needed pace, far exceeding that in any other jurisdiction.”
However, Peter Andrighetto, principal of Wright Dunn Real Estate.says there is still insufficient supply to meet demand. “We haven’t got supply here – and probably most capital cities are the same – there’s a lot of demand, and I think a lot of these buyers who have waited and waited are sick and tired of waiting and are getting into the market, and are independently causing the market to shift up as well.”
He explains that many buyers are seeing the market pushing forward and are rushing into the market for fear of missing out altogether, even despite possible interest rate rises later in the year.
“It doesn’t appear that interest rates really affect the Canberra market too much because we’ve got good employment and our market is a little bit insular to what’s happening elsewhere,” Andrighetto adds.
Looking ahead, Angie Zigomanis, senior analyst with BIS Shrapnel says house price growth will be slow or even turn negative if the government will cut spending severely,
“After the big stimulus spending over the past year, the government is going to have to try and cut the deficit back again. We expect them to implement various measures to cut back spending and it will affect employment, confidence and in turn housing. There are a few negatives in Canberra, but having said, politicians tend to talk tough but it doesn’t necessarily happen but as it is we expect growth to weaken over the next few years. “
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