Slow and steady
While other states are suffering sluggish property price growth, the ACT is staying the course with a stable and resilient property market
Capital growth in Canberra over the last year may appear benign at 0.6% (houses) and -0.1% (units), but those in the know say that the ACT is in a solid position for growth moving forward.
Indeed, the longer-term average annual appreciation rate for the region is 8.9% for houses and 9.5% for units, and in recent months price values have been on the up, appreciating at a rate of 5.8% and 4.2% respectively in the January 2013 quarter.
Steve Murphy, NSW/ACT franchise manager at Elders Real Estate, believes it is a sign of things to come. “We are confident of a very positive year in 2013, with lower interest rates and buyer confidence rising,” he says. “The underlying key, of course, is consumer confidence.”
A major factor influencing consumer confidence will be the results of the upcoming federal election, particularly as Canberra is the political centre of the country. A budget-conscious government could also result in a loss of jobs throughout the nation’s capital, and this could impact on the property market later in 2013.
“I think the Canberra market is largely in a bit of a holding pattern at the moment, waiting to see what happens with the next federal budget and federal election,” says Cameron Kusher from RP Data.
“It’s quite a different election this time because we’ve got a hung Parliament, and we haven’t had a hung Parliament for a very long time,” he adds.
Scheme to drive speculators away
The Land Rent Scheme, which gives people in Canberra the option of renting land rather than purchasing the land to build a home, was introduced years ago as part of the ACT Government’s Affordable Housing Action Plan.
The scheme makes the prospect of building a home more affordable, because rather than obtaining a mortgage to buy land, you can lease the land by paying a percentage of its value on an ongoing basis – with the option to purchase the land outright from the government at a later date.
“The benefit of the scheme is to enable people to buy a home sooner by reducing borrowing costs from banks, allowing them to save to buy the land outright in the future while paying land rent,” confirms the ACT Government Economic Development Directorate.
The scheme has now evolved with the introduction of a new security payment on February 18 this year, to coincide with the release of land in the suburb of Coombs, west of Canberra.
The security payment is being introduced to discourage land speculation and make sure that land in new releases goes to those people who are genuinely interested in building a home, rather than those who are angling to turn a quick profit.
At $10,000 for standard Land Rent lessees and $2,000 for discounted Land Rent lessees, the decent-sized payment is designed to ensure that buyers are fully committed to building on their block.
“The security payment will count towards the first year of Land Rent payments,” confirms the Real Estate Institute of ACT, “meaning there will be no additional administrative hurdles or extra costs incurred by genuine purchasers.”
Home to around 3,000 people, the suburb of Cook – named after Captain James Cook and Sir Joseph Cook, Australia’s sixth Prime Minister – is located north of Canberra’s CBD.
In the last 12 months house prices have increased 19% in Cook, up to $650,000, while units have appreciated 4%, reaching $491,000.
Real estate agent Sue Harrington from Luton Properties points to the suburb’s proximity to nearby Belconnen as one of the main drivers for growth.
“It’s a very central suburb, with easy access to the expressway and Belconnen to the north, although it’s a little tucked away and is quite nicely established,” she explains.
“With Belconnen growing like it is, with new facilities going up around the area, it’s becoming quite an employment centre now. Any suburbs surrounding Belconnen will do well, but especially Cook, as it has a little more of that prestige factor.”
Cook is characterised by more established homes rather than brand new residences, which means there are plenty of “older, semi-contemporary properties around, with really good opportunities to do homes up without demolishing them”, Harrington says.
“A lot of the houses are older-style homes, built in the 1970s, but people are coming in and doing them up. When you walk around the streets, every third house has had something done to it,” she adds.
“There are lots of medium-density townhouses, all surrounded by bushlands, so there are lots of options in the area. With less money, you can still get into Cook. The suburb has been sleeping and maybe a little bit forgotten about, so it’s a good time to get into the area.”