The market in Canberra appears safe for now but remains slow-moving.
Over the year to September, values in the nation’s capital rose by just 1.7 per cent, according to RP Data. While many other east coast cities have seen prices boom, Canberra has lagged behind.
Dwelling sales are up slightly over the past year, increasing by just 0.3 per cent in the most recent financial year, RP Data reports. But recent quarters may have seen an increase in activity.
In the September quarter, sales volumes climbed by 30 per cent, according to Herron Todd White. The firm reports that 1,856 properties were sold in the three months to September. While higher than previous months, this is well below the long-term average of 2,072 properties.
Herron Todd White suggests the average property in Canberra is a four-bedroom house with an en suite, such as those found in Woden, Weston Creek or Belconnen, costing between $550,000 and $650,000. The typical unit, meanwhile, is a two-bedroom, two-bathroom property generally found in the city, Braddon, Turner, Kingston, Barton or Forrest. This product type typically retails for between $500,000 and $600,000.
According to Herron Todd White, investors have an opportunity to pursue capital growth in houses but should expect softer rental returns than in the unit market. While conditions have been slow, they expect activity to increase as the market heads into the spring selling season.
Canberra has some of Australia’s most appealing suburbs for homebuyers, according to John McGrath from McGrath Estate Agents. He identifies Crace as the fastest-growing housing market in the country based on the value of new home approvals and population growth. This new housing estate is popular with families due to its modern housing, landscaped parks, sporting facilities and schools.
Mr McGrath calls Ainslie “a strong, reliable performer” that tends to be tightly held. In particular, its city access, appealing streetscapes and nearby employment hubs put it on many homebuyers’ wish lists. Turner, meanwhile, was highlighted for being a solid established suburb in close proximity to the CBD. Mr McGrath says investors could expect low long-term vacancies and reliable capital growth in the area.
Harrison is well positioned, situated only about 10 kilometres from the CBD. The area is also very close to the Federal Highway which links to Goulburn and Sydney. It is not far from Gungahlin’s town centre – about three kilometres – and that is quite big now due to developments in the past 20 years.
It has quite a young demographic, but there are a lot of old and middle-aged people who live there too. The suburb is already a very well-developed area that offers a selection of schools, community centres and shops and has a good spread of units, apartments, town houses and villas. There are also quite a few standard houses there too.
The proposal for a light rail system to be built in Canberra has been given the go-ahead by minister for Capital Metro Simon Corbell in September, which will be a huge plus because the line will run past Harrison and make it easier to get to the city. I think it will also stimulate future growth and higher rental returns.
Although Canberra is referred to as being in a ‘cooling cycle’, Harrison represents good value for money. It has not experienced much growth in recent years – only two to three per cent – but a lot of people are looking for property there.
Harrison is a good area for first home buyers and people looking to upgrade. It is a buyer’s market in Canberra at the moment and you can certainly bargain more than you could 12 months ago. The rental market in Canberra is not looking as good though, with vacancies hovering around 50 days on average. There is also an oversupply of units, which is causing a bit of a problem.
Despite the market not doing well in the past 12 months, I think Harrison is very well positioned for investors. If you are an investor, you would probably want to be looking more at town houses or house and land because they would be more desirable for the rental market and more likely to provide a better return in the short term.
It’s definitely a good time to be looking for a bargain which could see some real growth in two years’ time, especially with the recent approval of the light rail system. Once the oversupply of units gets chewed up, there is definitely growth potential for the long term too. I think the market will cool slightly and remain flat before experiencing some good growth in the next few years.
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