Canberra gets shaky
Changes to First Homebuyer Grants and decreasing land supply are doing little to steady a market where investor expectations are turning negative
If the Canberra property market shows anything, it is when bad news arrives it comes thick and fast. Not only has the state housing market been caught up in the roller coaster ride of political wrangling making headlines, but the economic outlook has soured too. Canberrans now see the outlook for their city as the worst in the country.
This was shown in a recent ANZ confidence survey, which showed the general view among residents of how the property sector would perform was not only negative, but scored below even Tasmania and South Australia – state economies largely considered to be struggling.
Commenting on the survey results, Warren Hogan, ANZ’s chief economist, and Paul Braddick, the
bank’s head of property research, said a combination of an uncertain political outlook and the continuing unwinding of a construction boom in 2011, were mostly responsible for the gloomy sentiment.
“[Half] of respondents expect ACT economic growth to be lower in the next year,” the authors said. They also pointed out the balance of respondents expected construction activity and prices to be lower across residential, office, retail and industrial property in 2014.
Perhaps in response, the ACT government has reduced the amount of new land available for development, with the majority of sites available for new dwellings in Belconnen, central Canberra and Gungahlin.
The ACT government is also counting on changes to the first homebuyers grant to soften the impact of tougher times. From September, the ACT grant for first time buyers will increase to $12,500 from its current level of $7,000.
The irony is despite the slower release of land and the coming lull expected in construction activity, the new grant structure will only reward purchasers of new homes or homes where substantial renovations will be undertaken.
Suburb to Watch
As uncertainty continues over the ACT property market’s fortunes over the short-term, investors looking towards the long-term (and specifically to holding an investment property over an entire property cycle) will need to consider Canberra suburbs enjoying evergreen demand. One of these is Phillip.
A short walk from Canberra Hospital, the major treatment and medical education centre for the ACT, Phillip is also close to Woden Town Centre where government offices, a Westfield Shopping Centre, library, cinema and restaurants bring a continuing stream of people into the area.
Lynne Bliss, a local agent with Luton Property, says the most sought after properties are renovated townhouses with double lock-up garages. “The area is unique because it only has medium density dwellings,” Bliss says, pointing out the suburb was designed in the 1970s to populate hilly terrain.
Bliss adds townhouse living suits busy people who want the benefits of a good sized house, without the hassle of large gardens. Owing to the suburb’s easy access to a number of different places where young people work, this is a particularly compelling reason for tenants to come to Phillip.
“Homes are 30-40 years old and many have been upgraded. Nearby Mawson is [also] being substantially redeveloped with older homes on large rezoned blocks being converted to medium density or dual occupancy,” says Bliss.
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