The national capital is echoing current trends in Sydney and Melbourne as affordability becomes a key concern
Housing affordability in Canberra has declined slightly with the increase to 19.7% in the proportion of income required to meet home loans. And that has been the result of rising property prices in Canberra, says Malcolm Gunning, president of the Real Estate Institute of Australia.
“As far as home affordability, prices, rental affordability and rents, it’s tracking in much the same way as Melbourne and Sydney, where you’re seeing vacancy rates rise,” says Gunning. “There has been strong local investment into residential properties in Canberra.”
Rental affordability in Canberra declined in 2018; however, the government has been taking steps to improve this, including new legislation introduced in November 2018. This will provide new protections for renters intended to enhance the security of rental properties and leases.
Land tax also appears to be affecting prices in Canberra, in large part because it has been gradually increased as the government transitions away from stamp duty. Though ostensibly meant to reduce costs, it has meant lower stamp duty with a higher land tax.
“Where the effect will probably be more pronounced is when you don’t have the same capital growth,” says Gunning. “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, as far as price is concerned.”
However, there is still cause for optimism in the ACT. With the government serving as the territory’s biggest employer, job opportunities are quite strong. Additionally, Canberra has good infrastructure for roads and increasingly for public transport, thanks to initiatives such as the new light rail network. While Canberra has not traditionally been as favoured by investors as Sydney or Melbourne, its relative affordability does present attractive options.
“Canberra is also underpinned by the growth of the surrounding district – that is, places such as Goulburn and Queanbeyan,” says Gunning. “They’re two strong growth areas that are based on affordability.”
Additionally, Canberra and its neighbouring areas are seeing family groups relocate from cities such as Sydney where the cost of housing is higher. This is providing a boost to the local economy that may help spur further investment in the future.
SUBURB TO WATCH
CASEY: Panning for property gold
Casey is still a relatively new suburb, which until 1990 was part of a private rural property known as ‘Gold Creek’. However, things have changed significantly since those early days, and in 2008 Casey began undergoing considerable redevelopment to provide more effective infrastructure.
These developments are turning Casey into an attractive option for owner-occupiers and investors alike. House and unit prices have risen consistently in the last five years, with house values growing by more than 10% in the last 12 months alone. The potential for strong rental returns is also there, as the indicative gross rental yield sits at 4.2% for houses and 5.1% for units.
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