The market in Canberra has been lagging behind other east coast capitals
Over the year to July home values in the ACT rose by a modest 1.9 per cent, according to RP Data. However, the three months to July show a definite pick-up in activity – Canberra was the country’s best performer in that period, up 2.1 per cent over the previous quarter.
According to a Property Council/ANZ survey, Canberra’s confidence ratings are the lowest in the nation. On an index where 100 represents a neutral feeling towards the market, Canberra scored just 101. The survey states public sector job losses, soft economic prospects and a slowing construction sector as the reasons behind the trend.
Nonetheless, certain parts of Canberra are undergoing a construction boom. The Housing Industry Association (HIA) identified three Canberra suburbs are the nation’s top building and population hotspots.
In Crace, north of the city, $111,958,000 worth of residential buildings were approved last year. The area is attracting new residents at a staggering rate – population growth is at 58.1 per cent, the HIA reports. Bonner and Casey were also recognised as suburbs being rapidly built up, defying the city’s grim economic outlook, the HIA says.
Residex also highlights Crace as an area to watch, due to its 13.74 per cent value growth over the past year. Another fast growing suburb is Wright, where house values improved by 15.32 per cent.
For units, top performers included Forrest and Belconnen, where prices rose by 2.95 per cent and 2.38 per cent respectively. However, price points differ dramatically in these areas – the median for units is $591,000 in Forrest, compared to $372,500 in Belconnen, according to Residex.
Another top pick was identified by onthehouse, which examined each suburb’s prospects over the next half-decade. The analysis pointed to Ngunnawal as an area poised for 10 per cent growth per annum over the next five years. The rental yield offered by the suburb is at 5.37 per cent.
Herron Todd White reports investor numbers are actually picking up in the ACT because the market is at the bottom of its cycle. Investors with around $500,000 to spend will get the most growth in the medium suburbs, the report suggests. For $500,000, it is possible to buy an older-style three bedroom house on a large allotment. The report says long-term growth is likely for this style of investment.
An alternative is to spend $500,000 on purchasing two to three houses in the outer suburbs. While growth is likely to be lower, this option would net a healthy rental yield, the Herron Todd White report states.
Fast 5 hotspots