Handbreak slowly easing on housing market
Despite a dreary few years in the housing market over the past few years, Canberra could be ready to make a comeback. Alastair Lynn reports
In a state held under duress by activity in the public services, Canberra’s housing market is looking to negotiate its release. Significant fiscal consolidation, job shedding, cutbacks in services and concern over job security has impacted the local economy over the last three years. Fortunately in the early stages of 2015, there are signs indicating that this subdued market may be on the mend.
The latest CoreLogic RP Data Home Value Index shows Canberra’s housing and unit values increased by 0.9% and 3.68% respectively last month. While overall dwellings are down 0.34% on this time the previous year, experts are confident that the indicators for growth are present.
“Certainly early signs have shown improvements in activity in the Canberra market, says Andrew Wilson, senior economist at Domain Group.
“The prospects are becoming more positive that the volatility in house price growth, particularly buyer activity, will end and we’ll see a more consistent outcome from the market that I think will be driven by lower interest rates.”
Data released over the last three months has certainly presented a reason for optimism.
Domain Group’s house price report for the December quarter showed the median house price grew 1.4% while units saw a 1.1% increase.
Wilson says that strong auction numbers at the end of 2014 and numbers tracking higher this year indicate that buyer activity is increasing. “There are early signs that confidence is gradually returning to the Canberra market and starting to filter back into prices growth,” he says.
With the CoreLogic RP Data Home Value Index showing the median house price at $580,000 and $410,000 for units, property in Canberra is not cheap.
However, Wilson pointed to buyer activity being generated more prominently in the middle and upper price range suburbs.
“There’s some positive signs for the Canberra market, however, it will always be hostage to what happens in terms of spending in the public services, so we need to be mindful of that.”
It’s not all doom and gloom
While Canberra has felt some impacts from the federal government’s plans to cut the public service, it does not spell the demise of the capital’s workforce.
“As is typical, when time passes by during the first term of a federal government, it finds it more difficult to implement cuts than intended,” says Linda Phillips, economist for Propell.
With unemployment levels at 4.5%, this does show a rise of 0.8% from 2014. However, ACT still holds the second lowest unemployment rate in the country, second only to NT.
Phillips says that as the situation is returning to normal, some growth in 2015 should be expected.
“Canberra in general has better prospects for investment in the next year, though newer properties, or those with redevelopment potential, will do better than average.”
SUBURB TO WATCH
Harrison: Developing infrastructure drives growth
Cinemas, Olympic swimming pools and excellent sports fields are just some of the developing infrastructure in the up and coming suburb of Harrison. While some suburbs in Canberra have been struggling due to the federal government’s cuts to the public service, Harrison has been going from strength to strength with a 12-month growth of 8%.
Situated just 2km east of the Gungahlin
Town Centre, everything a couple or family could need is easily accessible. Primary schools, shopping centres, parks, medical centres and restaurants are all within a stone’s throw of virtually anywhere in the suburb. With the Canberra CBD only 10km away, the drive into town via the Federal Highway takes as little as 14 minutes.
The Land Development Agency has put a lot of time and effort over the last several years to Harrison and the surrounding suburbs. This in turn is driving interest in the area. Gungahlin Town Centre is now one of Canberra’s fastest growing hubs. Along with amenities like clubs, department stores and libraries, significant effort has been put into transport. A network of cycle ways and pedestrian paths now criss-cross the suburb. Together with well serviced bus routes, Harrison is well connected with the city and neighbouring suburbs.
Harrison is also a lot less expensive than nearby Nicholls ($500,000) and Forde ($522,000). Closer proximity to shopping centres and the CBD makes the area more appealing to both young or established couples.