Despite slowing growth in the capital, investors have lots to smile about as yields jumped by 6.55%.
Investor activities have slowed during September as evidenced by a 10.67% drop in sales turnover according to ACT Planning and Land Authority (ACTPLA). This sharp drop in sales has further exacerbated the already tight rental supply as lesser rental properties are coming into the market.
Good news for investors though as the fierce competition for rental homes pushed rental yields to a stunning 6. 55% in the three months ending September.
Herron Todd White says the presence of large transient residents in Canberra has led to a large increase in rental values in the last two years and this has prompted many renters to look to buy a property as a way of escaping increasing rental levels.
However, with house prices remaining the third most expensive in Australia, buyers are finding they are now being priced out of the inner city markets. Even with a small increase of 1.3% in value, houses are fetching a median of $431,500. Units are not that cheap either as median prices rose 2.3% to $334,500 in the same period.
“The affordability crisis is currently confined in the inner regions with many buyers looking in the outer suburbs or neighbouring regional towns as these areas offer affordable land within commuting distance to the city,” says a Herron Todd White report. It adds that many first homebuyers may also choose to buy in NSW to take advantage of the first homeowners stamp duty concessions.
The resulting affordability squeeze has benefited satellite suburbs like Conder, which continued to perform well throughout September. Median house price rose 4.41% to $418,500 in the three months ending September according to Residex.
The suburb, which is a part of the Tuggeranong district features major developments including The Landscape and Eastern Valley Rise, which have provided a strong boost in population in the area.
High performing suburb, Kambah
remained attractive among buyers achieving a median house price of $377,500 and 63 sales for during September. Kambah is the largest suburb of the satellite city of Tuggeranong, covering an area of 1130 hectares and features the Murrumbidgee Country Club and two shopping centers. The suburb has been attracting a growing number of workers priced out of the expensive inner city dwellings in the CBD.
Isabella Plains also notched up some solid performance with median unit values increasing to $295,000. The area recorded a 5.95% capital growth and a median weekly rent of $335 during the same period. The Isabella Plains community is situated in the centre of the Tuggeranong Valley in Canberra’s south. It includes Isabella Plains Primary School, MacKillop Catholic College (senior campus years 10-12) and is a member of the ‘Tuggeranong Link’ – a non-profit organisation providing low cost venues and activities for residents.
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