Injection of confidence required
Uncertain times mean Canberra’s market continues to display the effects of a lack of confidence, but all is not lost for the nation’s capital
Uncertain times tend to breed nerves and an unpredictable atmosphere. Following the federal government cost-cutting budget, and the ongoing spectre of public sector job losses, such is currently the case for the under-performing Canberra property market.
APM senior economist Andrew Wilson describes Canberra as the problem child of Australia’s markets at the moment. “Both prices and sales have been bouncing round, up and down, from quarter to quarter. There is no clear trend emerging. We have seen a fall in prices in the March quarter and then a bit of a recovery in the June quarter but, overall, it’s two steps forward, two steps back.”
The latest RP Data Rismark Hedonic Home Value Index results back up this view. While there was a small growth (of 0.5%) in dwelling values over June itself, there was a drop of -0.5% over the quarter.
Further, APM’s tracking shows that rental demand has declined, which means that rents are also going backwards.
Regardless of what the locals say, these indicators result from the issue of job loss in the public sector, Wilson says. “The economy is improving slowly and Canberra has low unemployment and high incomes anyway. So it really is issues to do with job security which are influencing market activity and keeping the market subdued.”
Low interest rates and improved affordability have not lifted Canberra’s market, as they have in other capital cities. Wilson says that this means any significant improvement is a question of confidence returning to the market.
“Unfortunately, that will depend on the outlook for improvement to the public sector. And that will probably not come until we get closer to the end of the current political cycle.”
All is not lost for the nation’s capital, however. Wilson believes Canberra offers good value for those buying because it has not recorded the same sort of price growth that cities, like Sydney, have.
According to the RP Data Rismark results, Canberra’s current median dwelling price is $525,000. This compares favourably to Sydney which has a current median dwelling price of $690,000.
Australia’s wellbeing capital
Meanwhile, Property Council ACT executive director Catherine Carter says the OECD recently named Canberra as the city with the highest level of wellbeing in Australia.
The results underscore the need for the successful delivery of the ACT government’s ambitious $2.5bn investment in infrastructure projects like Capital Metro and City to the Lake, Carter adds. “These high-quality infrastructure projects will generate jobs and further enhance our city’s liveability.”
For investors, it is worth considering Canberra’s liveability, relative affordability and planned infrastructure investment as these elements could well trump the market’s case of the jitter
Suburb to watch
Long plagued by a negative stigma, due to some troublesome council flats, the times are now a-changing for Lyons. Its proximity to the CBD and abundant opportunities for development or renovation mean this is a suburb on the rise.
The dodgy flats have been knocked down and replaced by a flash, multi-storey apartment development, which is proving popular, Tim Burke, from Luton, says. “It presents a good opportunity for people to buy for a better price in an area which does not have an oversupply of apartments.”
This development has prompted further positive change. The shopping centre has recently been upgraded, and a smaller boutique apartment development and a retirement village development have just been completed.
A mix of zoning in Lyons means it is possible to build multi-unit strata titles and two properties on one title, so there is space for development, Burke says.
“Further, many of the older houses in the area are ex-government and provide good scope for renovation. You can buy a basic three bedroom house for about $500,000 to $550,000, do a renovation and, if done well, you’ll be looked at a $700,000+ property.”
Sitting on the fringe of Canberra’s inner south, Lyons is 15 minutes from the CBD, five minutes from the hospital and has easy access to all necessary amenities. However, Burke says it is not just the suburb’s location which makes it popular, it also boasts one of the better rental markets in the area.
“Generally, the suburb has seen good growth over the years. But it has got considerably better in recent times. I would expect that to continue.”
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