Canberra keeps chugging along steadily, with stamp duty exemptions and economic stability expected to boost demand
As one of the premium property markets in Australia, Canberra maintains a steady growth trend supported by a strong economy. However, an influx of apartment supply has had an effect on house price growth.
“House price growth in Canberra was minimal in 2017/18 and 2018/19, impacted by record unit supply and first home buyer incentives in NSW that may have drawn demand into adjoining regions,” says Angie Zigomanis, associate director of BIS Oxford Economics.
“The median house and unit prices are each forecast to rise by 10% in the three years to June 2022, although unit price rises will be weighted toward the end of the forecast period as the current supply pipeline is worked through.”
Zigomanis adds that the implementation of stamp duty exemptions in the ACT, which took effect on 1 July, are anticipated to boost demand in the year ahead. The conclusion of the federal election period also returned stability to the state.
“It’s likely that buyer demand and confidence is responding to the positive effect of a stable federal government, as well as lower interest rates, tax cuts and a subtle easing in credit policy,” says CoreLogic head of research Tim Lawless.
While an increase in the median vendor discount over the 2018/19 period reflected a slowing in the market, the low interest rates and relaxed borrowing restrictions have helped shift negotiating power from buyers back to sellers, which could cause discount rates to fall again.
The value of lending in the state also showed an increase over July 2019, signalling an uptick in mortgage demand, especially from first home buyers. CoreLogic data indicated that the value of lending to owner-occupier first home buyers skyrocketed by 76.4%, peaking for the first time since November 2018.
Despite unit supply dampening price growth, the unit market in the suburb of Gungahlin edged into CoreLogic’s Top Rental Performers list for September 2019, ranking 99th out of 100 suburbs. The market offers rental returns of 6.4% from a median rent of $450 per week, and the vacancy rate is in the comfortable range at 2.4%. The median price is an affordable $360,713, making properties here a great entry point for investors.
SUBURB TO WATCH
CAMPBELL: Premium suburb draws demand
The house market in the suburb of Campbell continues to show strong growth, as refl ected in the latest CoreLogic data. Over the 12 months to August 2019, house values soared by 10.5%, pushing the median up to $1.26m.
This trend was observed over the most recent fi ve-year period, with average growth of 46.9% since 2014. By contrast, unit prices slipped by 2.8% to a median of $467,454 in the year to August.
Nonetheless, rental yields are quite high in the unit market, at an average of 5.2%, and rental rates skyrocketed by 13.5% to an average of $545 per week in the year to June 2019.
Yield: Units in Campbell generate a healthy average rental return of 5.2%
Growth: While unit prices have fallen, the house market is still recording double-digit growth
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