The political sector ensures Canberra has a strong economy, but rising prices may end up quelling buyer demand
The strong presence of the political sector in Canberra continues to support this stable, growing market.
“The federal government is a major direct and indirect employer. The attractiveness of the local labour market has been a key driving force behind the population increase, and this growth trajectory is likely to continue,” says Kate Forbes, national director of property strategy at Metropole Property Strategists.
Over the past few years, the ACT has enjoyed a consistent and steady inflow of residents looking to benefit from the significant employment opportunities in the state, given the low underemployment and effective unemployment rates. However, it seems it’s becoming increasingly difficult to buy property in Canberra.
“The unemployment rate of 3.9% is low – even below the NSW average. But while Canberra may be a great place to live and buy your home, the high level of rates and the excessive land tax takes the cream off investing in Australia’s capital,” Forbes says.
“In 2017, the Canberra Times reported how owners of units and apartments faced a big rates hike as the ACT government moves to bring their rates into line with freestanding houses.” The increase in rates is a response to the lowering of stamp duty, and is prompting landlords to look at selling their properties.
“Although values have continued to increase, and remain at historic highs, the annual rate of growth over the past year was the slowest it has been since June 2016,” Forbes says.
High values deter demand
For Multifocus Properties CEO Philippe Brach, the current population growth rate in Canberra is still not adequate to support the city’s remarkably high property values.
“Canberra is a market that relies on politicians because it’s the political capital of Australia. The price point is fairly expensive, but it’s only got 300,000 people living there. I’d rather stay close to a capital city that’s got five million people in it,” he says.
“At the end of the day, your capital is going to be driven by population growth. In Canberra, there’s a little bit, for sure, but not enough.”
Given the many apartments under construction at present, oversupply could wind up becoming a big issue for Canberra if demand wilts due to pricing.
SUBURB TO WATCH
BONNER: Strong growth in prices, rental rates
The wide streets and open layout of Bonner make it highly desirable to buyers, as evidenced by the suburb’s strong growth rates over the five years to August 2018.
House prices hit $688,471 after a boost of 9.6% in the 12 months to August 2018, while unit values have risen by 3.3% to just under $470,000. Rental rates have also increased, as the suburb is quite popular with tenants.
At the heart of Bonner is a shopping centre. There is a primary school that also serves the nearby suburbs of Forde and Jacka. Mulligan’s Flat Nature Reserve is on the northeastern fringe of the suburb.
Amenities: Bonner has its own shopping centre, primary school and nature reserve
Growth: Values rose consistently over the five years to August 2018
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