The capital is not expected to slow, but despite a strong performance by the house market, unit oversupply is limiting overall growth
A significant influx of migrants is maintaining the strength of the Canberra market and feeding its economy in a positive cycle, which looks set to continue in the near future.
Real Estate Institute of Australia president Malcolm Gunning noted that, as of November 2017, the number of owner-occupier finance commitments in the ACT increased by 1.2% – the largest boost among the states.
“It is pleasing to see the increased presence of first home buyers. The figures show that owner-occupiers and first home buyers are responding to more stable conditions and, in the case of first home buyers, state government incentives,” Gunning says.
The local government believes the population of Canberra will continue to increase to an annual rate of 6% by 2020.
“Around 60% of this growth will be due to natural increase and about 40% through net overseas and interstate migration,” says Michael Yardney, CEO of Metropole Property Strategists.
Yardney considers Canberra to be a quiet achiever in 2017. However, the landscape is uneven, with the house market experiencing considerably more demand than units.
“Houses are rising at more than double the rate of unit values, with house values up 5.8% over the year while unit values are only just beating inflation at 2.1%,” Yardney says.
“Having said that, I don’t consider Canberra a good place to invest as their horrendous land tax rates chew into your cash flow more than anywhere else in Australia.”
According to the January 2018 ANZ/Property Council Survey, the expectations for capital growth in the residential and retail sectors have dropped; however, the expectations for growth in housing and retirement are peaking. Thus, the outlook for the ACT in 2018 remains optimistic.
For Property Council of ACT director Adina Cirson, the show of confidence displayed places pressure on the ACT Government’s ability to respond quickly to market demand by limiting red tape, implementing fair taxation and minimising planning delays brought about by rising approval levels.
SUBURB TO WATCH
HOLT: House prices tick upwards
Detached housing is attracting a lot of interest in the suburb of Holt, situated within the Belconnen district.
House values rose by 12.7% in the 12 months to December 2017, pushing up the median price to just below $530,000. Investors can reap returns of around 4.6%.
While units failed to record the same level of growth, prices still increased by 5.7% to a median value of $373,144, with an average rental yield of nearly 5%.
Holt is bordered by bushland and is close to destinations like the Molongolo River and Ginniderra Falls Tourist Park. Kippax Centre contains a shopping centre and is also a group centre that serves the other suburbs in the vicinity.
Amenities: Home of the Kippax Fair Shopping Centre, as well as several schools
Location: Holt is close to bushland, open farmland and tourist spots
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