Canberra is showing strong growth prospects for the year ahead, suggesting sellers will be able to dictate the pace
One of Australia’s healthier property markets, Canberra offers great prospects for those transacting in property. Investors can anticipate growth in the year ahead, while sellers can bank on sales profits.
“The Canberra–Queanbeyan significant urban area is the hottest in the country. It managed to edge out Hobart for the top spot,” says Jeremy Sheppard, director of research at Empower Wealth.
In the 12 months to June 2018, the demand-to-supply ratio for Canberra rose from 61 to 62, peaking in 2017 at 66. This suggests demand is ahead of supply, as supported by metrics like low sales discounts, tight vacancy rates and low property stock. Local agents report that open inspections have increased in number, and rental growth is reasonably strong.
“Discounting is the standout at 2.6%. That means sellers are really in the box seat. They’re turning their nose up at offers that aren’t really attractive. They can only do this in markets where demand clearly exceeds supply,” Sheppard says.
“Most of the top markets seem to lie somewhere between $450,000 and $650,000. Yields are quite healthy too, usually above 4.5%.”
Sheppard highlights the suburbs of Charnwood, Kambah, Wanniassa and Latham, where houses are selling like hotcakes via auction. Rental gains are high, and rents look to be on the uptick as well. The limited supply ensures that competition is hot.
CoreLogic’s Quarterly Rental Review for June 2018 notes that the heavy regulation of Canberra’s housing stock has contributed to the strengthening of the rental market. Data from Domain indicates that the asking rents for both houses and units have been increasing year-on-year across all ACT regions.
Houses on a steady track
A report from OnTheHouse.com.au indicates that, among the three top-performing suburbs in the ACT over the 10 years to 2018, Mawson’s unit market claimed the top spot – apartment prices recorded an increase of 73.6% in that period. However, the next two runners-up earned their distinction from their house markets, suggesting that the ACT is still mainly a territory for house buyers.
Real Estate Institute of Australia president Malcolm Gunning’s poor outlook for units supports this greater focus on houses in the Canberra market.
“We don’t expect to see any growth above the general trend; that is, we don’t expect to see any growth in Canberra unit prices. If anything, I think it will trend down.”
SUBURB TO WATCH
EVATT: Houses are the top pick
Located in the centre of a clutch of suburbs that include Belconnen, Melba, Florey and Spence, Evatt’s property market is blossoming, with steady growth and high yields.
Houses have been particularly strong, showing average price growth of 11% in the year to June 2018. Tenant demand has also been high, and rental rates have risen by 13% to a median weekly rate of $520. Landlords are able to reap a 4.7% gross rental yield.
Evatt has three primary schools, namely Evatt Primary School, Miles Franklin Primary School and St Monica’s Primary School. The Evatt Neighbourhood Oval is adjacent to Evatt Primary, while the South West Evatt Oval is close to St Monica’s Primary.
Location: Evatt is surrounded by many suburbs, including Belconnen, that provide amenities
Rent: Steady growth in the house rental market is a strong drawcard for investors