Population issues could affect prospects in the ACT capital in the short term as NSW stamp duty concessions come into effect
Canberra is generally considered to be doing well by most property market experts, but some recent developments could be causing demand to drop.
“Because NSW is offering concessions on stamp duty, there’s been a bit of an outflow of people in the ACT,” says Angie Zigomanis, senior manager of residential property at BIS Oxford Economics, basing this on recent migration data.
“This may alleviate some of the demand for housing in Canberra.”
As a result of the NSW concessions, ACT residents may consider moving out to Queanbeyan, which is just across the border.
“A first-time buyer can still work in Canberra and commute while still getting a stamp duty concession and taking advantage of cheaper prices,” Zigomanis explains.
“At the end of the day, that sort of incentive is not going to be permanent, and eventually stamp duty will come back into play again, so it’s just going to be a temporary move in the short term,” he adds.
“Canberra’s a bigger city, a bigger hub, so people going to Queanbeyan are going more for affordability than anything else.”
Demand factors in play
With a lot of detached housing being bought up by the government because of the Mr Fluffy asbestos incident a few years ago, houses continue to attract demand.
“Canberra’s apartment market is still fairly weak, but the house market’s been a lot stronger. Population growth to Canberra’s picked up; overseas migration’s picked up – it’s probably more students than anything else,” Zigomanis says.
Damien Lee, head of acquisitions at Caifu Property, adds that there has been construction going on for mixed-use, gentrification high-density projects. However, he considers Canberra to be a controlled market.
“It’s a big market in itself … there’s a good population base there, a good job base, but based on that market it can become oversupplied very quickly,” Lee says.
“I know it’s very controlled, with all the land and development supply there, and it’s who is in power in the government at any one time that has a big influence on Canberra. So it’s a fickle one – you can classify it as more of a trading market, like Adelaide and Perth.”
SUBURB TO WATCH
FRANKLIN: Units perform well
In the Gungahlin suburb of Franklin, units are reporting better performances than houses, with prices rising by 8.9% respectively.
A total of 59 units were sold in 12 months to December 2017, ass opposed to 55 houses. Moreover, units were sold at a much lower average discount of just 1.2% than houses at 2.8%. With apartments also boasting a higher average rental yield of 5.6% (compared to 4% for houses), this suggests investors could see a lot more value in the unit market.
The suburb is known for naming streets after writers. There are a lot of open spaces for walking and cycling, and Canberra Nature Park lies just beyond Franklin’s western border.
Amenities: There’s plenty of spaces for outdoor activities like walking and cycling
Yield: Franklin’s unit market offers average rental returns of almost 6%