Catching up fast
The Canberra market may be small, but it’s got growth momentum working in its favour
Canberra often suffers from bad publicity, not just from its resident politicians, but also its property market. As such, it doesn’t generally feature in many investors’ hot list for investment destination.
Yet, the national capital city has quietly recovered and is now rapidly catching up with the bigger states.
According to the January stats from CoreLogic RP Data, dwelling values across Canberra rose by 2.8% over the first month of 2016, significantly stronger than Sydney’s 0.5% gain and even higher than Melbourne’s 2.5% rise.
During the past 12 months ending January, Canberra was the third strongest capital city market after Melbourne and Sydney, with home values up 6% compared to January 2015.
“These strong conditions are in whole driven by houses, where monthly movements show a 2.9% increase and the annual rate of capital growth is 6.7%,” says Tim Lawless, head of research at CoreLogic RP Data.
Similarly, Domain also recorded a solid performance by Canberra over the December quarter when median house prices grew by 4.3% – its highest quarterly growth rate since December 2009.
“It’s a great result for the capital’s housing market, which has seen a median house price increase of 9% overall in 2015,” says Andrew Wilson, senior economist with Domain. “The Canberra market continues to rise after a subdued period of buyer activity.”
In contrast, the unit market’s performance has been relatively weak due to lingering oversupply concerns.
CoreLogic RP Data reported a drop of 3.3% in median unit values during the year. Despite this, the rental market remains buoyant with rental rates rising across the city, according to Lawless.
“Gross yields in Canberra have maintained strength and as at the end of January 2016 were recorded at 4% for houses and 5.1% for units,” says Lawless.
Wilson says the Domain results also revealed a weaker showing for units and blames the strong supply coming into the market.
“The fall of unit prices across 2015 demonstrates the high levels of new apartment construction predictably moving supply ahead of demand in the Canberra market,” he says.
Sunnier days ahead
While the ACT in many respects is still a “one company town” that was caught up in the tightening of the Federal Government’s purse strings in recent years, Deloitte Access Economics says there are signs that “the worst of the cutbacks have passed”.
The economic forecaster noted the following recent developments as reasons for optimism:
SUBURB TO WATCH
Hughes, ACT: Affordable units defy downturn
- Job growth has recovered, and is the strongest it has been in three years
- Solid lift in job vacancies suggests that the recovery has a firm basis and that further job gains may be ahead
- While the unemployment rate has continued to creep higher, it remains at just above 5% and a return to job growth will help on that front
- Population growth has also edged higher, returning to the national average from a trough in late 2014.
Surrounded by green nature parks, Hughes is an easy drive or bus ride to the city. Located about 5km southeast of the Parliament House, the suburb also offers local employment options, such as a nearby hospital and schools.
Families from overseas are also drawn to Hughes thanks to a well-known primary school that offers a special language program. That’s all helped fuel a greater demand.
While houses dominate the suburb, units are getting a lot of demand as well, due to their lower price tags. At just $280,000 median unit value compared to houses at $870k, it’s easy to see units’ appeal to buyers.
Many of the more popular homes are located along Birdwood Street on the northeast corner of town. This part of the suburb is considered the best area, according to locals.
While Hughes is relatively close to the CBD, residents still enjoy numerous walking trails, commencing at the northeast end of the suburb. There are also some sporting facilities, such as the North Woden Tennis Club and Clarrie Hermes Park.