Despite being one of the most consistent markets in the country, Canberra’s lack of affordability remains a serious dampener on its appeal to buyers.
It already boasts one of the highest median prices among Australia’s capital cities, at $611,841, trailing only Sydney and Melbourne. CoreLogic’s Home Value Index for December 2019 notes that it is also one of three areas in the country to report record-high housing values, alongside Hobart and regional Tasmania.
Moreover, Canberra remains the priciest capital city to rent a house in. The Domain Rental Report for Q4 2019 indicates that in the wake of a boom in unit construction, asking rents continued to increase, and significantly too – house rents were up by 3.6% over the year, while unit rates increased by 2.1%.
The vacancy rate in Canberra was low, a sign of high demand in spite of the rental rate, although it did go up in 2019. However, while Belconnen’s unit market and Tuggeranong’s house market followed the city’s general trend with rental rate increases of 6% and 5%, respectively, Woden Valley house rents declined by 3%. At the same time, rental yields from both houses and units in Canberra been on the up.
Nonetheless, the potential movements in the rental market have not improved buyer sentiment towards Canberra. In the 2019 Property Investor Sentiment Survey conducted by Your Investment Property, Property Update and Onthehouse, this capital city ranked above only Darwin in terms of capital growth potential for investors in the next five years. The findings from the ANZ/Property Council Survey for March 2020 supported this – while house price expectations were high for the ACT, buyer sentiment dropped considerably.
A possible factor is the difficulty of financing a property here, even with the government’s First Home Loan Deposit Scheme (FHLDS).
“Under the FHLDS, high income earners are being offered the same advantage as lower-income earners. It may actually provide more advantage to those earning towards the top of the threshold,” says Eliza Owen, CoreLogic’s head of residential research in Australia.
“The scheme is currently limited to 10,000 guarantees a year, awarded on a ‘first in, first served’ basis. In reality, the savings rate is unlikely to be constant across all income levels, and [the scheme] does not address issues such as spatial inequality, where lower income households find it harder to buy closer to employment centres or in more ‘liveable’ areas.”
SUBURB TO WATCH
The house market in the suburb of Pearce has shown strong growth for a number of years, but in the 12 months to December 2019 values fell by 0.5%. Unit prices dropped even more, falling by 5.1% following a decline trend that began in 2016. This took the median unit value down to under $450,000.
Pearce is approximately 10km from Canberra, so in terms of convenience it’s a good option for buyers, given the relative affordability of units. The Mount Taylor Nature Reserve has trails leading to a peak that offers stunning views of Tuggeranong and Woden. There are also excellent amenities like schools and shops.
Location: Pearce is just 10km from Canberra, offering convenience to those working in the capital
Nature: The Mount Taylor Nature Reserve is in the vicinity, and hiking to the peak yields a great view
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