Better than expected
Elections aside, the Canberra property market is not doing too badly, and a recently passed tax break might help it out even further
Defying predictions of election related stagnation, the latest RP Data–Rismark property value index shows that Canberra’s property market has actually been growing.
According to RP Data research director Tim Lawless, Canberra recorded a 0.9% growth in dwelling values over August, which was the second strongest result of the capital cities. Over the three months before that, Canberra recorded 3.7% growth, he says.
While the latest figures take the rolling three-month change in overall capital city dwelling values to 4%, the rate of growth has slowed.
“This is a welcome sign after the strong growth conditions of previous months fuelled renewed debate around the sustainability of dwelling values,” Lawless adds.
Rismark CEO Ben Skilbeck says there continue to be a number of indicators suggesting investors will be punching above their weight this
spring. “With year-on-year gross total returns being 10% across the combined capital cities, and borrowing costs close to half of this, it’s likely investors will continue to be attracted into the market.”
Herron Todd White’s Jordan Hayes says that federal elections have a stronger influence on the mindset of Canberrians than on the market itself, and it is this that can play a pivotal role in creating uncertainty.
Yet, perhaps surprisingly, the Canberra market is currently doing better than most expected, he says. “This can in part be attributed to the cut in interest rates which somewhat nullified the adverse effects of uncertainty which the elections generate.”
It is as though while some were discussing the potential repercussions of the election, others were out in the market capitalising on the historically low interest rates, Hayes continues. “If interest rates remain this low, you can predict that the property market in Canberra will continue to remain stable and possibly grow when the uncertainty somewhat fades.”
Granny flat construction now easier
Meanwhile, ACT Sustainable Development Minister Simon Corbell has announced that those wanting to build an eligible secondary dwelling will no longer have to pay lease variation charges. Nor will they need to submit a valuation report to the government.
The tax break will make it easier for property owners to build secondary residences on their properties. It could save property owners several thousand dollars in charges.
Property Council executive director Catherine Carter says the exemption was recognition of the fact that lease variation charges have proven to be a deterrent to infill development and the development of secondary housing options.
However, the government has not dealt with issues around subdivision and dual-occupancy opportunities on larger blocks to stimulate urban renewal and densification to achieve 50% infill targets, she adds.
Suburb to Watch
Historical pedigree marks out the inner-north suburb of Braddon. One of the oldest suburbs in Canberra, it is home to a number of significant heritage features, including the Gorman House Arts Centre, Ainslie School and Haig Park.
Maloney’s Real Estate principal Peter Maloney says the suburb was identified for urban renewal in the 1990s. Many original brick houses and blocks have since been amalgamated into three-storey walk-up apartments. Apartment blocks now dominate, although some traditional single family homes do remain.
According to Maloney, greater population density has led to massive growth in cafes, restaurants and bars in the area. Lonsdale Street is the cosmopolitan hub, with designer outlets, art galleries, and gift and homeware shops. Wider Braddon is home to the Canberra offices of News Corp, Colmar Brunton and the ACT division of the Labor Party. From 2014, more than 1000 Telstra workers will be based here.
Braddon is in easy walking distance for CBD workers and students at the university, Maloney says. “It is one of the few places in Canberra you could live without having to own a car.”
Investors looking for value should consider established one- or two bedroom apartments of about 10 years old, he adds. “A one-bedroom apartment would sell for between $340,000 to $380,000 and rent for between $380 to $420 per week. A two-bedroom will sell for between $430,000 to $460,000 and rent for between $480 to $500 per week.”
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