It is going to be a tale of two market segments in Canberra this year, with unit prices hitting a lull and housing values riding on strong demand, according to the latest forecast by Herron Todd White.
Demand for houses is poised to remain steady given the expected population growth, said Angus Howell, property valuer at Herron Todd White.
"There is a predicted rise in population, and these people will all need somewhere to protect them from the Canberra elements, from freezing winter conditions to the searing summer heat," he said in the report.
The city's series of investments in infrastructure, including the development of the Northbourne Avenue corridor, the Canberra Hospital expansion, and the new Canberra Theatre, are attracting more people to the city. Furthermore, the introduction of Stage 1 of the light rail system and the plans in place for the next stages are also making the city attractive for potential homebuyers.
"Housing in established suburbs is still expected to be in demand with property selling well, particularly in the popular inner south and inner north," Howell said.
Also read: The city that booms when others bust
Ainslie and Yarralumla are the two suburbs with the highest median house prices at over $1m. On the other hand, the cheapest homes are located in Belconnen, Charnwood, Banks, and Phillip, where prices could be as low as $375,000.
Howell said the changes to the Home Buyer Concession Scheme that the ACT government rolled out last year boosted the demand for homes in the lower end of the market. The scheme helps first-home buyers by waiving stamp duty.
"Unfortunately, this has generally resulted in any savings being absorbed by the rise in sale price due to an increased number of people looking at property in this price bracket," Howell said.
While the forecast for the housing market points to steady growth this year, the expectations for the unit market are not as bright.
Howell said unit markets in areas like Gungahlin have seen values decline due to the influx of supply and reduced demand.
The demand for units might also be affected by the recent news about the poorly designed and built units in Sydney and Melbourne. Howell said concerns about building quality could result in many potential buyers shifting their focus from buying off-the-plan to looking at older, more established blocks.
"However, it's not all bad news for owners of units as rental income is high and vacancy rates are low, and there is no reason to believe this will change over the coming year," he said.
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