High demand and price growth potential make Canberra a good market – but buyers need to know the law
Canberra’s property performance is going strong, but this market needs experienced hands.
“Canberra’s a funny market. It’s very cyclical and controlled. Who’s in power at the time has either a positive or negative effect on prices – any changes in policy are directly correlated to jobs. That’s a big driver for real estate,” says Damien Lee, head of acquisitions at Caifu Property.
Uncertainty in the political employment sector makes timing crucial when buying in Canberra.
“It needs to be more focused on timing than type of real estate or strategy or product,” Lee says.
The current slump in Sydney and Melbourne may also begin to affect Canberra’s growth rate as it becomes more expensive relative to other capital cities.
“I don’t think Canberra has got quite expensive, but a lot of people who live there will consider how expensive it is compared to Sydney and Melbourne,” Lee explains. “Prices will start to plateau or just stick steady for a little while until Canberra figures itself out.”
Current employment stability
According to Herron Todd White’s Month in Review report for November 2018, the employment sector has been quite stable. Both public and private sectors are recording growth, and demand for commercial property has been boosted by falling vacancy rates. Canberra also saw the elimination of stamp duty for commercial transfers under $1.5m in July 2018.
This was put into effect in order to drum up interest, and is expected to spur demand from both owner-occupiers and investors. The city is also upping its game in terms of infrastructure development, with plans being conceptualised for mixed-use developments. Bradley Street in the suburb of Phillip is also undergoing a major upgrade, and the resulting dining precinct is expected to be a hub of cafes, restaurants and local art installations.
Alongside the lifting of stamp duty, however, is the imposition of significant land tax on residential properties. It is a sticking point that buyers should always take note of, especially since this tax has already driven interested parties to the NSW border.
“With any market, you need to be aware of state legislation with regard to ownership, Airbnbs and some of the potential changes that will take place with that,” says Nerida Conisbee, chief economist at REA Group.
SUBURB TO WATCH
PALMERSTON: Steady price growth in major city
A suburb that caters very well for families, Palmerston has an ideal location in the heart of Gungahlin. It has recorded consistent growth, showing the extent of demand here. Not only have both house and unit prices risen steadily since 2013, but yields are high, particularly for units, at 5.4%.
There are myriad shops to meet residents’ needs, including an IGA supermarket, a chemist and takeaways. The local Palmerston Primary School is situated on Kosciuszko Avenue, and a Kumon tutoring centre further supplements children’s learning. Adjacent to the primary school is Palmerston Oval. For older kids, Gold Creek high school is just five minutes away from Palmerton, as is Gungahlin College.
Location: Palmerston is situated in the centre of Gungahlin, close to many conveniences
Growth: The suburb has seen steady growth over the fi ve years to November 2018
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