Houses are booming in the national capital, but high unit supply levels are pulling the overall market down
Investors are flocking to Canberra as the city’s housing market continues to prosper.
According to the Domain State of the Market report for June 2017, the median house price has surpassed $720,000. This boom is attributed to Canberra’s strong housing demand, with homes close to amenities, such as schools and public transport, faring best.
However, the apartment market has found itself slipping, and the median value has fallen to approximately $400,000. Demand generated by tenants has steadied the unit rental market, which has maintained a strong weekly rental rate of $420 and ensured that investors are gaining solid returns.
“With healthy market confidence and affordable unit prices, the city is bursting with possibilities,” the Domain report states.
Angie Zigomanis, senior manager of residential property at BIS Oxford Economics, concurs that while the apartment market has certainly been softer due to new supply coming in, there remains demand for such properties.
“In recent years, apartments have made up more than half of the new dwelling supply in Canberra. They’ve often been purchased by investors. The owners are now looking for tenants, and the rental market has been relatively competitive. So that’s put a lid on apartment prices,” he says.
“The ACT Government’s now putting in a light rail line from central Canberra north towards Gungahlin, so that will help the apartment lifestyle.”
Despite the positive performance of the market, buyers do not seem very assured about Canberra’s prospects, as the findings of the ANZ/Property Council survey reveal.
“Indicators such as forward work schedule expectations have dampened this quarter, dropping well below the March–June expectation high,” explains Adina Cirson, executive director of the Property Council of Australia ACT.
“Of some concern is that we have again seen a significant decrease in national economic growth expectations, whilst still in the positive, are in stark contrast to the expectations for our territory economic growth expectations – ahead of all other state economic growth expectations.”
Nonetheless, industrial performance is serving as a source of hope for capital growth as the tourism and hospitality sectors flourish.
According to Michael Yardney, CEO of Metropole Property Strategists, Canberra is the only capital city other than Sydney and Melbourne to have recorded real growth in property prices over the past decade, once inflation was accounted for.
“The medium- to long-term outlook for Canberra property is good as it has a strong public sector, strong and stable employment market, below-average unemployment rate and above-average household incomes. All these point to continued property price growth in the future.”
SUBURB TO WATCH
GRIFFITH: Inner-city suburb boasts wide appeal
Griffith, an early inner-south suburb of Canberra, is a leafy, established residential suburb, also the site of the iconic art deco Whitley House, St Paul’s Anglican Church and the Russian Embassy .
Around 4,600 people call Griffith home, and the majority of employed residents work in management, administration, or government roles. The Manuka Shopping Centre is in Griffith itself, and locals also benefit from the suburb’s proximity to the boutique shops, cafes and restaurants of Kingston, along with the amenities on offer in nearby Manuka, Telopea Park and Lake Burley Griffin.
In this sought-after suburb, investors can choose from a range of property types, from older, more affordable apartments through to New York style lofts and spacious homes.
Location: Griffith is close to the CBD and sought-after suburbs
Employment: A large base of government workers live in the suburb