Steady as she goes
Canberra’s housing market has taken a dip recently, but units remain steady and the city’s strong fundamentals are keeping the property sector solid.
Canberra may have hit something of a blip in recent months, with capital growth hitting -3.8% in the three months to January, according to RP Data research director Tim Lawless, but the market remains steady thanks to a robust local economy.
“Canberra’s one of the highest paid geographies in the country, unemployment’s one of the lowest in the nation and employment growth is quite strong. The government sector is absolutely driving the market down there, and rental demand remains high – so it seems to tick all the boxes,” says Lawless.
He adds that units seem to be the key market for investors at the moment, with prices actually rising by 4% over the three months to January, “so it’s really the housing market that’s dragging Canberra down”.
And with units continuing to be in undersupply in the nation’s capital, developers have been scrambling to catch up with demand – leading to an influx of developments around the ACT’s town centres, notes PRDnationwide research analyst OdedEtzioni.
“Strong demand for inner-city developments has led to projects such as The Apartments [in the lakeside inner-city suburb of Acton] and the redevelopment of the Kingston Foreshore, expected to yield 1,700 apartments over the next few years.”
He adds that the overall number of sales in the unit market has been in decline, dropping by 55% in 2010 compared to the previous year. This can be seen as a symptom both of the chronic shortage of unit stock in Canberra, and the subsequent shift to off-the-plan buying – where the sale is only registered on settlement.
When it comes to yields, the ACT is performing well, says Lawless, with houses registering 5% on average and units recording a mark of 5.3%. This performance puts Canberra ahead of the national average and, in terms of capital cities, puts it second only to Darwin.
And for strong long-term investment opportunities, Herron Todd White advises in its Month in Review report that investors should look towards the newer northern suburbs of Gungahlin, the established southern suburbs of Tuggeranong and the traditional strongholds of the inner north and inner south. Serviced units, too, are hotly tipped, thanks to the make-up of the capital’s workforce.
“With the large number of fly-in, fly-out workers, the public service and general commercial traffic, there is constant demand for this style of accommodation and as a result the returns are high and the vacancy rates are low,” says the report.
And in terms of its future prognosis, it seems that Canberra’s combination of highly-paid workers, low vacancy rates and undersupply of stock will make it very much a case of steady as she goes for the foreseeable future.
“I don’t see anything changing for Canberra,” says Lawless. “It still seems to be quite a robust market. The rental market is strong and there are strong economic fundamentals so it’s all pretty good.”
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