The Canberra market continues to underperform
Canberra was the only state or territory capital to record negative property growth in the 12 months leading up to December, according to CoreLogic RP Data.
The research house says that dwelling values in the city fell by 0.6 per cent in the 12 months leading up to December.
The final quarter of the year was particularly challenging for the Australian capital, with house values falling by 3.4 per cent.
The suburb of Mawson recorded the highest annual growth for houses at 21 per cent.
This figure far exceeds the area’s annual average growth rate of 6.2 per cent.
Curtin recorded the highest 12-month growth for units, at 39 per cent.
The median price for a dwelling in Canberra now stands at $520,000, below the capital city average of $575,000.
Despite the Australian capital’s comparatively low market entry point, a recent survey from Bankwest has raised concerns for the city’s first home buyers.
According to the survey, first home buyers who live in the capitals needed an average of 4.4 years to save for a house deposit as of June 2014.
That compared to 4.1 years at June 2009, which suggests the housing market across Australia has increasingly favoured sellers over the past five years.
However, the data has been heavily skewed by Sydney and Melbourne.
If Australia’s two biggest cities are removed from the results, the time taken to save for a house deposit in the other six capitals fell from 3.92 years in 2009 to 3.85 years in 2014.
The same could not be said for Canberra, where the time it took first home buyers to save for a deposit increased from 3.8 to 4.0 years.
However, Bankwest’s head of specialist banking, Ian Rakhit, says there is still affordable housing available across Australia.
He advises first home buyers to look further afield, where more affordable housing offered by regional local government areas makes them a more attractive alternative compared to capital cities.
Yarralumla is one of ACT’s blue-chip suburbs. Most of the area’s properties are spacious houses with three bedrooms or more.
Yarralumla’s well-established primary and secondary schools have attracted a high proportion of young families to the suburb in recent years.
Lake Burley Griffin acts as an important social hub for Yarralumla’s residents. The lake has a yacht club and sits close a large shopping centre, complete with retail spaces and restaurants.
The suburb is mostly owner-occupied, with a high proportion of residents enjoying full home ownership.
Market activity in Yarralumla is currently somewhat subdued. On average, properties are spending four months or more on the market.
Although the January period is often characterised by a downturn in property transactions, the wider ACT market has been underperforming for some time.
There is uncertainty surrounding factors like the upcoming Budget announcement, the state’s population decline and its oversupply of unit properties. That said, Yarralumla hasn’t been hit quite as hard with the unit oversupply issue due to its high proportion of houses.
The rental market isn’t an ideal one for investors.
The median price of property is high and rental prices are comparatively low.
Investors would be lucky to get a four per cent rental yield in most parts of Yarralumla as things stand. Eight per cent of Yarralumla’s rental market is government housing, although this figure may decrease if the state chooses to decrease certain department sizes.
I would advise investors to keep a close eye on the Yarralumla market but not to invest just yet.
There is an ongoing debate over the impact that “Mr Fluffy” asbestos homes will have on the area. At the end of 2014, a buy-back scheme agreement was made with the federal government to demolish and rebuild these homes.
Add the 1,000 homes in Canberra that will be demolished under this scheme to the 500 homes that were lost in the recent bushfires, and we may have at least a small counterbalance to the oversupply problem.
Given the opportunity to resettle, people tend to move into better areas like Yarralumla. However, it is too early to tell which way the market will go.
The inner south is always going to be a desirable part of the Canberra market. Although an investor is likely to find better value for money elsewhere, the lifestyle aspect Yarralumla makes it a highly desirable place to live.
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