In our latest McGrath Report, we discuss the interesting playing field of today’s ACT property market. Few capital city markets have as many challenges & as many opportunities both at the same time, so we encourage buyers & sellers to consider their options carefully before making their next move.
The biggest cut in public sector jobs in 20 years & an oversupply of new apartments are the major challenges for Canberra right now. The market has been jittery since before the election but property values have shown resilience.
Overall, the ACT market has been quite uneventful over the past year, with the usual pause around election time followed by a period of uncertainty over jobs that kept market activity on ice in many regions of the city.
The Budget announcement of 16,500 public service job cuts by 2017 was especially concerning for Canberra, as 42% of the nation’s public servants live & work in the city. Nothing dampens market enthusiasm like job worries but after a slow Winter – which is pretty traditional anyway, we sense a change in confidence.
RP Data figures show Canberra house prices rose 3.2% January to August, with apartments up 1%. This is a similar rate of growth to 2013 when houses rose 3.7% & apartments 1.5%. Prices are certainly not booming but they’re not going backwards.
Low interest rates & a lack of quality houses for sale are keeping house prices solid. The apartment sector is a different story, with the oversupply having a material effect on prices.
In inner north Dickson, some properties are selling for prices close to the 2010 market peak as more locals look to upgrade. Further north in Gungahlin, newly completed suburbs such as Crace are attracting families & an increasing number of Asian & Indian owner-occupiers purchasing after a few years of renting.
Downsizing is becoming a significant trend that should be turbocharged by new stamp duty concessions.
As more public sector jobs go – with many redundancies aimed at senior managers; we expect to see more downsizing helped along by the new Over 60s Home Bonus Scheme. The two-year scheme provides massive stamp duty concessions for over 60s. Just $20 will be charged on purchases up to $595,000 – a drop in the ocean compared to the $20,550 you would normally pay.
I see an opportunity for downsizers to buy well now in the oversupplied new apartment market with plenty of choice, time & negotiating power on their side. Some downsizers prefer townhouses & this demand is being met by developers building infill properties now that government land releases are being scaled back.
Investment activity is down & the apartment sector will remain tough for some time. Mainland Chinese are not big players in Canberra as yet but a HSBC study of wealthy Asian investors shows 34% are interested in the ACT – well ahead of NSW (20%), VIC (25%) & QLD (29%).
John McGrath’s Top Picks for best suburbs to buy in Canberra
Ainslie – a strong reliable performer, this is a large tightly-held suburb with a significant segment elevated to capture city views & also backing onto bush reserve. It is walking distance to the city with wide leafy streets & vibrant village shops & cafes. Also has easy access to the employment hubs of Russell & Barton.
Turner – a very solid performer & one of the closest established suburbs to the CBD. A lot of new boutique apartments & townhouses are going in. It has easy access to the Australian National University (ANU) & is popular with students, academics & CBD executives. Low long-term vacancy rates & reliable capital growth.
Crace/Franklin – these relatively new neighbouring suburbs are very popular with families due to their modern housing, landscaped parks, sporting facilities, cafes & schools. Crace is Australia’s fastest growing housing market according to the Housing Industry Association, based on the value of new home approvals & population growth.
