15th May 2009
As first homebuyers storm the market to take advantage of the government grants, investors have now joined the buying frenzy.
While the year on year growth within the ACT residential market remains flat, there are signs that homebuyers are making their way back into the market.
James Nimmo, marketing agent from LJ Hooker Dickson says the current low interest rate environment and government grants are creating a fair bit of urgency in the market at the moment.
"Canberra's rental market has always been strong, but the difference now is that low interest rates are providing extremely favourable investment conditions. So if the right opportunity arises where the numbers add up, then investors are buying because most properties are paying for themselves."
Nimmo says the rush of first homebuyer and investor money into the 2009 Canberra market has done more than shield the sub $500,000 range from economic worries - it has pushed prices up.
"For example in the suburb of Downer, three bedroom renovated homes which were selling in the high $400,000's at the end of 2008 are now selling in the early to mid $500,000 price range," he says.
"But it is not only these inner northern areas of Canberra that we've seen substantial price increases in, it has been evident right across the city."
Doors open to a new market
While the stimulus influenced the first homebuyer market, competitive first homebuyers have influenced the emergence of another market within the ACT, says the president of the Real Estate Institute of ACT, Michael Wellsmore.
"The immediate impact created by the Government incentives during the last quarter of 2008 has picked up speed in the early months of 2009," he says.
"So much though, that existing homeowners looking to upgrade or buy another property are finally getting their chance to enter the market again," he says.
Wellsmore says the constant activity in the lower price range around the $450,000 mark has been crucial in feeding confidence through to the second and third homebuyers markets.
"The $600,000 price range is now beginning to move a lot faster."
Rental demand continues to run hot
Parts of the ACT rental market have recorded vacancy rates as low as 1% and under, says Wellsmore, cementing a tight market and boosting investor confidence in their assets.
"The ACT hasn't really begun to address the shortages for properties that we've had here over the last few years. We now have an inherent demand for between 2,000 to 3,000 properties that there has not been land released for," says Wellsmore.
"The Government has been trying to play catch up but so far they haven't been able to keep up with demand."
Wellsmore says the increasing number of overseas university students wanting to live close to Canberra's universities is set to place even more pressure on the housing market in the ACT over the coming year.
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