Canberra Property Market Update February 2020
Ahhhh Canberra…….the city the rest of Australia loves to hate. Well listen up, the times they are a-changing.
Population growth is over two percent year on- year, investment in infrastructure including development of the Northbourne Avenue corridor, the Canberra Hospital expansion, a new Canberra Theatre and the successful introduction of Stage 1 of the light rail system (with plans in place for Stages 2 to 4) seem to be attracting more people to the Bush Capital.
So what does this mean for the Canberra housing market? Well, let’s look back before we look forward. 2019 brought us the long-awaited conclusion to the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry, record low interest rates as well as a general election and the media frenzy regarding the Sydney and Melbourne housing markets. Any one of these events could have significantly affected the Canberra market but what actually happened? Not a lot! Houses still sold and most real estate agents have had a very good year, thank you very much. In fact, records were broken with 30 Mugga Way, Red Hill, selling for $5.85 million at the tail end of the year.
So what of 2020? From my Year 7 economics lessons, I recollect the effects of supply and demand on any market and it is no different in the Canberra housing market. There is a predicted rise in population (for the reasons stated above) and these people will all need somewhere to protect them from the Canberra elements (freezing winter conditions and searing summer heat).
So the demand is there but what about the supply? Sales of Mr Fluffy blocks have slowed considerably with the general consensus being that you can get better value elsewhere. New land releases in Wright, Coombs, Denman Prospect, Throsby, Taylor and Strathnairn have seen steady sales with additional land releases in Whitlam set for March 2020. These should keep the building contractors in Canberra busy over the coming year and possibly see a rise in already high construction costs.
Supply of units is a slightly different story although it is influenced by locality. Units in areas such as Gungahlin (approximately 14 kilometres from Civic), have seen values drop slightly due to rapid development, with an influx of units coming onto the market and reduced demand (back to Year 7 economics).
Elsewhere, the value of units is expected to be steady although it will be interesting to see the effect of the recent media attention given to poorly designed or built units in Sydney and Melbourne and whether this will see potential purchasers turning their attention from buying off-plan to looking at older more established blocks. However, it’s not all bad news for owners of units as rental income is high and vacancy rates are low and there is no reason to believe this will change over the coming year.
Housing in established suburbs is still expected to be in demand with property selling well, particularly in the popular inner south and inner north. Ainslie and Yarralumla are leading the field with regards to median house prices which are well over $1 million. At the other end of the scale, areas further away from Civic have a lower median house price such as Belconnen ($375,000), Charnwood ($458,000), Banks ($488,500) and Phillip ($490,000).
The introduction of the home buyer concession scheme, which means that first time buyers pay no stamp duty if their income is under a certain threshold, has strengthened the lower end of the market. Unfortunately, this has generally resulted in any savings being absorbed by the rise in sale price due to an increased number of people looking at property in this price bracket.
We anticipate a slightly slow start to 2020, which is not uncommon, followed by a steady year with some growth in all sectors except for the unit market which is expected to be fairly stagnant with some fall back in places. However, don’t be surprised if that record sale price is toppled in 2020.
Speak with a Canberra Mortgage Broker today.