Properties are recording premium prices, but buyers are taking a ‘wait and see’ approach while the political waves settle
In Australia’s capital, properties continue to lean towards the pricey side. However, the fallout of the federal election has been driving buyers to be cautious.
“Investors tend to pull their head in and not buy or get aggressive in investing leading into or immediately after an election – there’s always a bit of wait and see,” says Results Mentoring director Brendan Kelly.
“Combined with the royal commission outcomes and the APRA changes, which have been encouraged by the RBA to ease lending criteria, at the moment we are seeing a change, and there’s uncertainty.”
Canberra’s property scene has generally been influenced by political movement, as the same sector fuels the job market. And it’s not limited to local politics – global issues like Brexit and the rise of China have their impact as well.
“Canberra’s political environment drives property rather than standard market forces, so it’s the bureaucratic political decision that broadly affects or influences the housing market significantly. Given the change in government, I’m reading that we’ll end up in a more neutral environment,” Kelly says.
“We’ll settle over the next six months; consequently, I think we won’t see a lot of activity in buying in Canberra. I’m anticipating that we’ll end up with more of a balanced market.”
Canberra is one of the best examples of how employment opportunities can significantly support the property market. The Housing Industry Association’s (HIA’s) Population and Residential Building Hotspots report for 2019 suggests that, even with the election outcome, building activity in the ACT is likely to carry on as normal.
The report noted that over 2017/18 the population rose rapidly, drawing in migrants from both within and outside the country. A major reason for the capital’s appeal to overseas buyers is its focus on international education, which in turn is a necessity given Canberra’s place as Australia’s main political centre.
Migrants are also drawn to the capital’s robust economy, which boasted the lowest unemployment rate in Australia during that period, at 3.5%.
Buoyed by these factors, seven suburbs were identified by the HIA as hotspots for buyers to look out for based on residential building approvals and population growth from 2017 to 2018. The list includes the suburbs of Greenway, Phillip, Kambah and Curtin.
SUBURB TO WATCH
GORDON: Good vibes in Tuggeranong suburb
Bordered by the suburbs of Bonython, Conder and Banks, Gordon is in fi ne company, as its growth levels confirm.
The suburb has been on an upward trajectory since 2014, with house values skyrocketing by 25.4% over the five years to March 2019 to hit a median of $636,310. While the growth trend has been gentler, the unit market has been quite positive as well, with values rising by 6.8% in the year to March 2019 to pass the $400,000 mark.
The good news does not end there – investors are also able to reap short-term gains from the high rental yields – 4.7% for houses and 5.5% for units as of January 2019.
Location: Neighbouring suburbs in the Tuggeranong district include Banks, Bonython and Conder
Yield: Rental properties in Gordon generate solid returns in the 4–5% range
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