Canberra market ‘ticking all the boxes’
The roller-coaster ride may be coming to an end as the Canberra housing market gets back on track. But how long can the positive signs last?
As of late, the Canberra property market has been like that one amusement park ride you wish you had never stepped on to.
It looked enticing to begin with. Growth rates were on track to reach dizzying heights, and high rents meant good returns. However, over the past five years the market has bounced up, down and sideways long enough to make even the hardiest investor sick to their stomach.
An underperforming local economy, coupled with the federal government’s polices of fiscal consolidation, has induced a lacklustre performance. Job uncertainty has created a lack of activity and low confidence. To make things worse, population growth in the ACT is now at an eight-year low.
However, recent statistics indicate that the wild and unpredictable ride may be over. The latest CoreLogic RP Data Hedonic Home Value Index showed dwelling values were up 1.48% on the same period in 2014.
“The ACT has been subdued in sale values for a couple of years and it’s due for a bit of a price increase; that’s now starting to happen,” says Ron Bell, CEO of the Real Estate Institute of ACT.
Domain Group senior economist Andrew Wilson agrees that Canberra has “bounced into the new year running”.
“Auction clearance rates are now tracking at their highest level in nearly six years, and volumes are also up strongly over the same time last year.
“That clearance rate at just under 70% over March is about 10% higher than a year ago and the highest since September 2009.”
Changeover in the mid to upper price range is driving this surge in buyer activity.
“It’s ticking all the boxes at the moment. It’s just a question of whether the economic fundamentals will hold up,” Wilson says.
Spanners in the works
While Canberra is seeing some positive growth, the fiscal position of the federal government will always mean the market is exposed.
“The budget deficit will be a problem going the long way at the moment, given issues such as the price of iron ore and a number of other constraining issues with low incomes and prices growth,” Wilson says.
However, Bell says it might not be all doom and gloom for the public service sector.
“The federal government have probably completed their program of reducing the size of the public service.
“About 8,500 people were either retrenched or given redundancies, and that had no impact on the market.”
Wilson says investors should be looking at the long-term capabilities of their properties.
“It’s in catch-up mode now; it’s coming from a fair way back in that sense, but the signs are very positive going forward.
“I would expect prices to grow by maybe 2% or 3% this year, with prospects of it maybe being higher.”
SUBURB TO WATCH
Rivett: Central living at its best
If central Canberra is the place to be, then Rivett is a suburb that ticks all the boxes. Situated in Weston
Creek, it provides all the conveniences of inner-city living, coupled with an outdoor lifestyle. With a vacancy rate of just 0.52%, demand for property in this suburb is on the rise.
Rivett is already a popular suburb with families of all ages. It is not just what the suburb itself offers that makes it popular, but its location. There are no schools in Rivett but several in the surrounding suburbs. There is a small selection of shopping on Rivett Place, with a supermarket, bakery and hairdresser’s, but the main commercial hub is Cooleman Court in neighbouring Weston. All the necessities, such as a pharmacy, restaurants, banks, service stations and a post office, are close to hand.
A range of parklands and reserves can be found in Rivett. Stromlo Forest Park sits to the east of the suburb and Cooleman Ridge Nature Reserve to the south.
Just 15km from the Canberra CBD, Rivett is easily accessible by bus and car.
With an average house price of $494,500, Rivett fits comfortably into the mid-range pricing for Canberra. With a rental yield of 5%, it is safe to say investors will see good returns. Houses with more than three bedrooms are popular in this area.