20th March 2009
A quick glance at the numbers shows there hasn't been much happening in terms of growth in the ACT property market lately. Slight quarterly drops were recorded in median prices for both houses and units in December, according to Residex.
Some of that drop has been part of a correction in the top end of the market. Yet there's still plenty of reason for investors to hope for a soft landing followed by more growth in the future, says Paul Powderly, Colliers International Canberra chief executive.
"The slowing has been a result of uncertainty in the economy, and not due to any fundamental shift in the key drivers of the ACT market," he says.
Unemployment is low, household income is strong and interest rates are at an all-time low, he says. Plus the market is in a supply and demand equilibrium, which has been underpinning current price levels for those properties ranging from $300,000 to $600,000, says Powderly.
Boost to first home buyers making an impact
In that lower range of property, the effect of the boost to the First Home Buyer Grant has already been seen and expected to pick up further in the coming months.
"Despite the general slowing of sales activity, the recent announcements from the federal government is stimulating the bottom end of the residential market and is expected to dominate activity for the next six months," says Powderly.
He highlights Gungahlin and Tuggeranong as two of the suburbs best positioned to benefit from increased new homes sales resulting from the boost.
"Mid-January saw a spike in the number of people attending open homes, especially at the bottom end of the market, followed by a flutter of sales that is not showing any signs of slowing," says Powderly.
Fundamentals still there at top
The Canberra suburbs have some of the highest collective earners in Australia, recent figures from the Australian Bureau of Statistics show. Many of those on government or military jobs in the area have stable jobs not as likely to be hit by the current financial crisis.
While the real estate buyer confidence is down, pulling with it some of the higher-end property values, Powderly says there's still reason to believe the market can recover on the top level.
The $800,000 to $2m segment may be the slowest in the ACT, there's been a significant return to enquiry levels in January compared to the two months prior, says Powderly.
"Overall, Canberra is expected to enjoy the counter cyclical benefits of a recessionary environment with low interest rates and first home buyer incentives, while enjoying good employment and higher disposable income," he says.
The solid employment and incomes in and around the capital has also benefited the rental market, with Canberra producing yields comparable to Sydney and Darwin.
That solid employment coupled with migration to the city has kept demand strong going and expected to keep it that way into the coming months.
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