The ACT looks to be experiencing a downturn in the market and could continue to underperform.
CoreLogic RP Data reports that Canberra has moved through the peak of its growth cycle.
In the 12 months leading up to November, the data house reports property values in the city grew by a modest 0.9 per cent.
It also says that over the past three months, out of Australia’s capital cities, Canberra experienced the second-greatest fall in values at 2.4 per cent, followed closely by Hobart at 2.8 per cent.
Other data supports this, with SQM Research managing director Louis Christopher saying the capital is “undergoing a downturn in the current market”.
He attributes this activity mostly to the slashing of government jobs in the area, which has forced people to leave the ACT and seek employment in other locations across the country.
SQM’s Asking Prices Index shows asking prices for units in Canberra are down by 6.4 per cent since the same week last year.
SQM predicts dwelling prices in the city will decrease between one and four per cent in 2015 “as a base case scenario”.
In addition, SQM released a list of the top 10 most discounted properties across the territory.
The most discounted property is a unit in Belconnen that has been on the market for 98 days. The initial asking price of $244,000 has been reduced by 18 per cent to $200,000.
The next, in Yarralumla, has come down from $3,950,000 to $3,385,000 – a reduction of 14 per cent.
Three of the properties on the list are in the suburb of Belconnen and two of these have been on the market in excess of 800 days.
Terry Ryder, founder of hotspotting.com.au, believes that the Canberra and Sydney markets are very far apart.
The real estate expert says that the dichotomy of Sydney’s acceleration and Canberra’s slow reverse is ample evidence that it is foolish to speak of conditions in “the Australian property market”.
Mr Ryder adds that there are no “rising fast” markets in Canberra and only five “rising steadily” markets.
Yarralumla is one of the high end suburbs of Canberra. It’s an old part of the city with beautiful, established trees and a lovely shopping centre, with a village feel. There are a lot of the embassies in Yarralumla and it also fronts the lake at the yacht club.
The area is close to the city; it’s just a quick trip past Parliament House and into the CBD. It is one of the more blue-ribbon areas.
The suburb does have some eclectic, older dwellings but there is a lot of urban renewal that is continuing to happen. It is a family oriented area, with big homes and good schools. Executives live there, it is not known for “executive living”.
Yarralumla was the second most expensive suburb for both apartments and houses, just behind Forrest. It always will be regarded as an high-end suburb and the median price is over $1 million for houses. However, there are also more apartments being built there now.
We have seen a fall in the price of houses over the past month, about 6.8 per cent according to All Homes data. Time on the market is also taking a little bit longer – but I think from the point of view that it’s always going to be blue-chip, it’s a good long-term hold.
However, you need to be able to afford the cash flow because your buy-in prices sit well above the five per cent yield for rent. The majority of the rental properties are units and town houses because they are an affordable way to get into the suburb for investors.
In terms of rent, a three-bedroom town house could cost you $1,000 a week while an older four-bedroom house might be closer to $800. The properties cost a lot to buy so the rents are high but the vacancy rates might also be extended. People have a choice and they might choose elsewhere.
I think there will be no great price growth anywhere in Canberra in the next little while. Outside of some random record prices being achieved for some really stellar properties, there are scarce offerings.
It’s going to be flat for the next year or so. I don’t see a turnaround in the next 12 to 18 months but I don’t see a great drop either. I predict we’re going to have a choppy ride where it will go up and down.
However, Yarralumla is a desirable location so it will always be a strong suburb.
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