Canberra is forging ahead of other markets, supported by stable prices and strong demand for both houses and units
As Australia’s property market continues to struggle through a national downturn, the country’s capital is powering through, showing some of the strongest market conditions, with an increase in house values of 4.1% overall.
According to CoreLogic’s Hedonic Home Value Index for March 2019, Canberra’s rental market was one of the tightest in the country as of February 2019. The average rental rate has increased by 4.7% in the past year – a testament to demand.
There has also been an increase in property sales across different price points over the most recent five-year period – CoreLogic data indicate that properties priced in the $400,000-$600,000 range comprised the biggest share of sales activity in Canberra. Furthermore, the share of million-dollar sales soared to 8.8% of all dwelling property during that time.
In a March 2019 research report, Domain economist Trent Wiltshire noted that Canberra “sits in the middle of the pack of price volatility compared to other capital cities. Within Canberra, mid-price properties have generally seen more stable price growth than cheaper and more expensive properties, particularly for houses”.
A shift towards affordable units
Houses have generally been the dominant property type in the ACT, but units have been catching up due to their relative affordability.
“Both houses and units are in strong demand, and 12 months ago, houses were ahead of units. But there’s been a change, perhaps to more affordable properties, and now units seem to have a slight edge over houses,” says Jeremy Sheppard, head of research at Select Residential Property.
While high prices have affected demand in some respects, a decrease in supply has compensated for this.
“Although demand has dropped marginally from slower selling times and lower auction clearance rates, there’s been a proportional decrease in supply too, which has helped to maintain a high demand-to-supply ratio,” Sheppard adds.
“There are two standout metrics in this area. Firstly, discounting is very low. Buyers have little luck getting sellers to come down on price. And secondly, vacancy rates are very tight at around 1%.”
As a result, Canberra’s property market remains largely stable, with strong growth opportunities still on the horizon.
SUBURB TO WATCH
YARRALUMLA: Units fall while houses rise
Yarralumla’s median house price may have passed the million-dollar mark, but growth continues to chug along in this premium suburb.
House values went up by 1.3% in the 12 months to February 2019, following a strong streak of double-digit growth in the past five years. However, it’s been the opposite story for the unit market, in which prices are plummeting at an ever-increasing rate. In fact, in the year to February 2019 alone, they plunged by a whopping 41%, bringing the median down to $559,211.
Yarralumla is home to many diplomats, who favour its beautiful lakeside location, leafy streets and the fact that it’s just a 10-minute drive from the Canberra CBD.
Location: Yarralumla boasts a beautiful lakeside position and proximity to the CBD
Renter appeal: The suburb is popular with diplomats who enjoy the prestige lifestyle