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The Canberra market has remained subdued in recent times
Traditionally, the Australian Capital Territory market is not subject to the same highs and lows as the east coast cities. Public service workers make up the bulk of demand in the market and new contracts keep a steady in-flow of workers into the city, according to local buyer’s agent Tom Duffy.
Residex reported house prices rose by just 2.28 per cent over the year to May, while units rose by 1.07 per cent. These lagging conditions may be reflective of the uncertainty in the public service sector after recent government cutbacks.
BIS Shrapnel predicted the market will continue to remain flat over the coming three years. Apart from the impact of federal government policy on the market, the firm warns that an oversupply of properties may be developing in the city. This issue is particularly evident in the inner-city unit sector.
Given this oversupply, vacancy rates are beginning to climb, BIS Shrapnel warns. In addition, federal government cutbacks are like to lead to slower population growth as less people come to the capital on new contracts. Overall, the company predicts values are likely to rise by only three per cent by 2017.
However, the market is also showing signs for optimism. According to RP Data, sales volumes have continued to climb despite weaker price growth. Over the past year, house sales increased by 11.2 per cent while unit sales rose by a whopping 23.9 per cent.
Canberra is also Australia’s most affordable capital city markets, based on average income, according to Residex. Their analysis shows the average family would need to spend 29.17 per cent of their income to afford a house at the median income.
The ACT ranks in the middle of all the states and territories for loss-making sales. Around 7.1 per cent of all vendors end up losing money on the re-sale of their property.
Recently, the REINSW applauded the ACT government for legislative changes that benefit investors. These changes include lowering the transfer of land tax and bringing in incentives for over-60s to downsize their homes.
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