ACT poised for growth
The ACT's legion of financially secure public service workers is helping Canberra and its surrounds to emerge from the residential real estate market downturn comparatively unscathed. Robert Carry takes a look at which of its locations and market sectors are performing, and at where experts believe savvy investors will be putting their money next
This time last year Canberra's population was bracing itself for the worst of the global financial crisis amid dire warnings of a stalled economy, a collapse in real estate activity and massive job losses. The capital ultimately faired far better than many experts predicted thanks to a number of factors - not least the insulated position its status as the seat of government affords.
"Canberra has been something of a safe-haven for investors," said Colliers International's Canberra project marketing director Derek Whitcombe. "There are thousands employed by the public service so Canberra is in some ways quite isolated and did not suffer during the downturn to the same extent as other cities."
Although Canberra's property prices have not quite hit the heady growth rates currently being witnessed in Sydney or Melbourne, they have held their own and a lack of reliance on the hard-hit tourism and mineral industries means they are outstripping the likes of Perth and Brisbane.
While solid levels of employment have steadied the ACT's residential market, first-time buyers, spurred into action by the finite availability of Government incentives, have contributed heavily towards the modest growth seen over the last quarter.
"We have found in the last three to four months that the residential market has been driven by first-time buyers," continues Whitcombe.
In fact, the almost frenetic activity triggered by the first-time buyers bonus highlighted a compression of demand over supply. In particular, Canberra was revealed as having an under-supply of centrally located apartments.
"We predicted that people would race to take advantage of the bonus," recalls Whitcombe. "Anything under 450,000 was snapped up and builders were racing to fill the demand for units in this bracket."
Shift towards the rich suburbs
However, Whitcombe believes there were other factors at play which will come to the fore with the end of the first-time buyers bonus: "Investors have been active in Canberra - and not just for rental returns, but also for capital gains. We are once again seeing investors putting their money in property rather than in the stock market."
Matthew Bell, Economist with Australian Property Monitors has also noted what he believes is the beginning of the end of a reliance on the first-time buyer's market as well as a shift of focus towards more expensive properties: "During the downturn it was the first time buyers market that helped to sustain the industry," Bell points out. "The recovery has been driven in large part by the luxury end of the market with more expensive houses which suffered during the downturn. These units are now leading the way in terms of price increases and sales. When people realised that the world wasn't going to end and that unemployment rates were not going to be as high as predicted the more expensive end of the residential market picked up."
Whitcombe notes that many of those investing in Canberra's residential property market share a similar profile: "Canberra's population is getting older and many have high incomes. We have seen a large number of older people selling the family home in the suburbs, which often comes with a large plot of land, and then buying a well-appointed apartment in the city centre." He continues, "Retirees with the means to invest are no longer sitting on their hands watching the grass grow - they are looking for substantial, high-end units in top locations."
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