In Canberra, frenzied first homebuyers are snapping up anything with walls and a roof under $450,000.
The signs coming out of Canberra are all very positive. After a year of corrections in the housing market, demand is strong and supply can't keep up.
Residex figures show that in the 12 months to May, house prices fell 0.96%. In the three months to May, prices picked up again, rising 2.07%. The median home value in Canberra is now $467,500 and median yield is at 4.69% - the second highest rental return in Australia, after Darwin.
Scott Crossman, director of residential sales at Ray White Canberra, says that agents are going through a tough period - not because of poor prices, but because they just can't get enough listings to meet demand. The overheated first homebuyer market in the outer suburbs is the main driver.
"That market is $20-30,000 over where it should be," he says. "We sold five on Saturday all under $450,000. It's red-hot. I look at our market here and say I'd love another 20 or 40 homes to sell, because they're going."
Price brackets above the $450,000 level are experiencing much more modest growth.
"The $5-700,000 bracket has been quite steady. What's been available there has been pretty good," Crossman says. "The $800-$1m bracket is a little bit slower, but again there's some action in there. I think the slowest area is probably the $1-2m area."
Crossman points out that there is a gap just outside the first homebuyer range, in the mid-$400s, where there are quite a few bargains to be found. Newer homes that are just out of reach of the majority of first homebuyers represent real value for investors.
The suburbs to have been hit hardest by the correction are prestige areas like Forrest, Griffith and Yarralumla. "They're the big end of town, so they've been hurt the most," says Crossman. "They're yet to dig themselves back out."
Having said that, Crossman's agents have been moving a bit of stock over $2m recently, albeit in unusual circumstances. "There was a bit of overseas buying power that came in and bought a few properties at the top end," Crossman notes. "We're hoping that will keep things flowing a bit because people will see that sort of activity and say, 'OK, people are paying that so there must be value there."
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