All is well in the Canberra property market, with data indicating that ACT investors are well positioned for steady gains in the years to come.
Things are looking good for the ACT’s property market, with the nation’s capital experiencing above-average capital growth, major infrastructure plans and limited vendor discounting.
Residex records 10.26% growth in median house values over the past 12 months, which is far greater than the long-term annual average of 7.76% over the past 20 years. Houses experienced a 1.2% increase in prices over the month to reach a median of $523,000 in June. Units have also shown positive growth, with Residex finding a 2.21% increase over the three months to June.
Rental vacancies are tightening in Canberra, with a shortage of available units relative to demand in June. Units achieved yields of 5.3% while houses fetched 4.49%, with weekly rental amounts sitting at $420 and $450 respectively.
RP Data says properties in Canberra are currently experiencing “very low” levels of vendor discounting. Sale
price discount levels for houses have decreased from 4.8% just 12 months ago to 3.7%, while units fell from 3.9% to 2%. Houses are taking just 31 days to sell, while units are taking an average of 32 days, according to RP Data.
Strong economy underpins housing demand
The ACT may have lost its top spot in the economic rankings by CommSec, but this by no means reflects a faltering economy.
The main reason for the lower ranking is WA’s stronger economic output of almost 29% above its long-term average, compared to the ACT’s 25% growth.
The ACT is still recording the fastest annual economic growth rate in the nation at 8.1%, followed by Western Australia with 6.9% growth, according to CommSec.
Craig James, chief economist with CommSec, notes that the ACT also continues to benefit from low unemployment and a strong housing market. The unemployment rate in the ACT is currently 3%, below the 3.6% long-term average.
When it comes to housing finance, the ACT is well ahead of the other states with the number of housing finance commitments jumping by almost 16%. This in turn led to the number of dwelling starts jumping 56% above the 10-year average during the March quarter.
On home prices, the ACT is achieving above-average growth and below-average inflation when compared with other states and territories. “ACT has the highest real wage gains of all states and territories and this explains in part the strength of home prices in relation to other economies,” James says.
However, he points out that the number of housing commitments is weakening, down 19% over 12 months. “This could have implications for the broader ACT economy over 2010/11.”
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