Canberra quietly recovers
While investors have been fixated on what’s been happening in Sydney and Melbourne, Canberra has quietly but surely built growth momentum
Some experts say it’s the new government and a better and well-received budget that have fuelled Canberra’s steady recovery. Others point to an improving economy.
Whatever it is, the proof is in the numbers. The latest CoreLogic RP Data stats show Canberra finishing the year 4% higher. While the December figure showed a 1.1% drop in median dwelling values and a slight fall over the quarter, the overall trend is looking positive for Canberra.
In dollar terms, property owners in Canberra saw the value of their homes increase by an estimated $21,900, according to Tim Lawless, head of research at CoreLogic RP Data.
During the past five years, median dwelling values have grown by 5.6%.
Andrew Wilson, senior economist at Domain, believes the upbeat sentiment is likely to continue over 2016.
“Canberra has had its best year in a long while,” he says. “The budget was well received, and that truly stopped the roller-coaster ride in prices. It now has a better economic climate.”
After suffering in the doldrums for a number of years, Canberra is now well into catch-up mode, according to Wilson.
“Prices have fallen over the past four years in Canberra. The perception that prices haven’t moved, combined with the low interest rate, has started the ball rolling. I believe there will be enough momentum for this market to grow this year and next year. Canberra at one point had a median very close to Sydney’s median in 2011, and it’s now well below.”
However, Wilson points out that Canberra is always going to depend on the budget and the public service, which are still uncertain.
“We still don’t have the good news we want from the local economy. Canberra still has hard decisions to make in terms of cost-cutting and so on. These will always have an impact on the market housing. What happens with the budget that comes in May will determine what’s next for the property market, and this will be critical.”
Robert Mellor, managing director at BIS Shrapnel, is also still concerned about the supply situation in the high-density housing sector.
“The market is oversupplied in terms of apartments,” he says. “As such, we expect the apartment market will fall by 1–2% this year due to oversupply. It’s true Canberra is an improving market but only for houses, not apartments. There’s no oversupply of detached housing, so we’re more bullish and expect to see around 4% growth in this sector.”
SUBURB TO WATCH
Griffith, ACT: Strong demand for houses fuels strong growth
One of Canberra’s central suburbs, Griffith is less than 2km to the south of Parliament House. The area takes in a significant amount of the parliamentary triangle and is therefore home to a number of government departments.
Griffith enjoys a range of cafes, bars and recreational facilities, both within the suburb itself and in the nearby suburbs of Kingston and Manuka. It’s within easy reach of the airport and just a short walk from Lake Burley Griffin. It attracts a high-income demographic, with a significant proportion of high-level civil servants and a number of diplomatic staff.
The area is Canberra’s equivalent to Sydney’s prestigious Mosman suburb. During the past 12 months, strong demand for houses pushed median values up by 10.9%, according to OnThehouse.com.au. It predicts this growth will continue, with median house values growing by 6% each year over the next eight years.
In contrast, the unit market is suffering from oversupply, and prices didn’t move last year.
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