With political stability leading to rising consumer confidence, Canberra is working to increase its land stock
The national property market is still on a downward trend, but that trend is slowing, according to CoreLogic’s June 2019 Home Value Index.
“The improvement in housing market conditions over the first five months of the year has largely been organic; however, since mid-May there has been a raft of announcements that should provide a further positive flowthrough to housing demand,” said CoreLogic head of research Tim Lawless.
“Stability within the federal government, along with the removal of uncertainty surrounding changes to negative gearing and capital gains tax discounts, has brought about increased certainty and boosted confidence in the housing market.”
As the centre of politics in Australia, Canberra is one market that certainly benefits from the stability of the national government. Indeed, Herron Todd White’s Month in Review report for July 2019 suggests that activity levels are on the up as the residential market settles and consumer confidence improves.
Meanwhile, in response to the demand for industrial land, the ACT state government has developed a Four-year Indicative Industrial Land Release Program. Essentially, the program is expected to heighten the responsiveness of the local government to movements in the market by conducting an inventory of land supply. In the next four years, over 100,000 metres of land are planned for release, and areas that are expected to receive land supply in the next few years are Symonston, Fyshwick, Majura Valley and Hume.
“The Territory’s government has taken the logical step of increasing the supply of medium to high density land. ACT rents are now the highest in Australia and astute investors can achieve good returns with prudent investment advice,” says Michael Kumm, president of Real Estate Institute of the ACT.
He also points out that population growth has complicated the government’s task of maintaining the ‘garden city’ appeal of Canberra while providing adequate land for residential accommodation.
In the near future, rental growth is also anticipated as tenant demand rises, given the proposal to cut interest rates further. At the same time, sales activity is expected to drop as rising municipal rates dissuade buyers from entering the market. The NSW border city of Queanbeyan serves as an attractive alternative for owner-occupiers looking to stay close to the ACT.
SUBURB TO WATCH
GARRAN: House rents skyrocket
The suburb of Garran is going from strength to strength as prices keep rising in this premium spot.
The median value of houses passed the $1m mark as prices went up by 6.1% in Garran in the year to June 2019. This follows a trend of positive growth since 2014. The same trend can be observed in the unit market, with the median unit value rising to over $600,000 in the same period.
Apartment yields are reasonable as well, at an average of 4.9%, and rental rates increased by 5.7% to an average of $560 per week. The rise in rents for houses was even more remarkable, soaring by 20.3% to hit a weekly average of nearly $700.
Rent: Rental returns are quite high in Garran following strong increases in the past year
Price: Garran isn’t a market for those on a budget, given its expensive property values
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