The outlook for the nation’s capital is bright, as a strong economy keeps the employment market bustling
With property values rising by almost 8% in 2017, Canberra stays on the heels of Melbourne and Sydney as one of only three states to experience real growth after accounting for inflation.
“The medium- to long-term outlook for Canberra property is good as it has a strong public sector, a strong and stable employment market, a below-average unemployment rate and above-average household incomes,” says Michael Yardney, CEO of Metropole Property Strategists.
“All this points to continued property price growth in the future, but at a more moderate rate likely to be in the order of 3–4% over 2018.”
Domain Group figures certainly confirm that the market is continuing to surge upwards as the end of the year approaches. Over the September 2017 quarter, Canberra had the highest growth rate among the capital cities, with the median house price rising by 4.4%. Units did not fare as well as houses, but they still reported a 1.9% boost in values.
Andrew Wilson, chief economist at Domain Group, attributes this positive performance to factors such as high migration levels, limited dwelling stock, confidence in the market, and low interest rates.
The state government is also aiming to increase density in existing pockets, according to Herron Todd White’s Month in Review for October 2017. Thus, more townhouses and apartments are expected to pop up in Canberra.
With development happening near the light rail project, this could generate a significant uptick in apartment investment and shift residents towards unit lifestyles, given the heightened convenience of nearby public transport. This spells good news for investors.
Investors lose out
Canberra’s popularity is also evident from the resale statistics. As per CoreLogic’s Pain and Gain report for the June 2017 quarter, almost all houses and units set for resale sold at a profit (97.8% and 79.3%, respectively). Even the regional market performed strongly in this regard.
The report findings also showed the difference between owner-occupiers and investors in terms of handling resale transactions: Canberra investors were 3.5 times more likely than owner-occupiers to resell at a loss.
“For owner-occupiers, the results show the benefits of selling in a buoyant market. Because of taxation rules, investors may be more prepared to sell at a loss because they, unlike owner-occupiers, can offset those losses against future capital gains,” says Cameron Kusher, CoreLogic research analyst.
SUBURB TO WATCH
NICHOLLS: Residents seek houses in Canberra suburb
The suburb of Nicholls is seeing considerably more demand for houses than units, suggesting that Canberra is yet to get used to the idea of an apartment lifestyle.
House values skyrocketed by 14.5% in the year to October 2017, with the median price clocking in at a little over $840,000. By contrast, the unit market saw a boost of just 6%. In terms of yield, however, this segment generates reasonable profit, with an average return of 4.4%.
Although it is a new suburb that was gazetted in 1991, several schools have already been established in Nicholls, including Gold Creek Primary School and St John Paul II College. Gold Creek Village is the suburb’s commercial hub.
Tourism: Tourist destinations include the National Dinosaur Museum and the Australian Reptile Centre
Recreation: The Perce Douglas Memorial playing fields and the local oval are popular facilities