Housing market update: A closer look at Canberra and the ACT
As Sydney and Melbourne’s housing markets slow down, another smaller market has picked up – Canberra and the ACT. This region has never been known for impressive price growth, or strong demand when it comes to property, however, recent data suggests that is about to change.
With that in mind, what’s the current state of the ACT’s property market, what’s in the future, and how should these facts affect your property decisions in future?
What’s the current state of the ACT’s property market and what’s in the future?
Median house prices rising
A number of factors are have been driving house price increases in Canberra and the wider ACT. These included rising interest from international and interstate investors, low interest rates and tight land releases among others.
This has placed upward pressure on prices, resulting in a median increase of 12.2 per cent during the year ending September, ACT Treasury and Economic Development data shows. That’s an impressive gain that compares to those of Melbourne and Sydney, and should prick the ears of astute investors nationwide.
On the other hand, the median house price actually fell by 0.2 per cent over the month of September. This could be construed as a sign of a slow down in the market, however, Treasury commentary suggests it’s an anomaly as a result of a smaller sample of property transfers.
Median unit prices falling
While the median house price in Canberra rockets up units head in the other direction.
While the median house price in Canberra rockets upwards, units head in the other direction. In fact, over the month of September alone median unit prices fell by a staggering 11.7 per cent.
Again this large drop could be a result of a smaller sample size of sales skewing the results, but it does seem to indicate a general trend.
Over the year ending in September, the median unit price in Canberra fell by 7.7 per cent. This drop was driven by a high volume of low value units sales, as well as a large addition of supply. In the June Quarter of 2017 alone, there were 1,008 dwelling commencements, the majority of which were apartments and units.
This represents an impressive increase of 28.7 per cent over the previous quarter and shows that housing commencements are steadily trending upwards in the region.
Affordability improves state wide
Housing in the ACT will remain affordable into the foreseeable future.
The ACT and the Northern Territory were the only states that recorded an improvement in housing affordability over the three months to September.
In fact, Real Estate Institute of Australia data shows that the ACT is the only state in Australia where the average proportion of income required to meet mortgage repayments is under 20 per cent.
This is promising for first home buyers in the region, and suggests that housing in the ACT will remain affordable into the foreseeable future.
Canberra prices forecasted to continue rising
It’s impossible to know exactly what the future holds for the housing market in Canberra and the ACT. However, expert analysts at BIS Oxford Economics and QBE expect median house prices to increase by 16.3 per cent from 2017 to 2020.
When compared to the forecasted median price movements in other areas from 2017 to 2020 these increases look extremely impressive:
- Sydney: decreasing by 0.2 per cent
- Melbourne: increasing by 10.2 per cent
- Hobart: Increasing by 10.8 per cent
- Brisbane: Increasing by 7.1 per cent
- Perth: Increasing by 2.1 per cent
- Adelaide: Increasing by 6.9 per cent
- Darwin: Decreasing by 0.9 per cent
As you can see, Canberra is expected to experience the largest median house price increases of any state in the country over the next three years. That suggests that not only is the Canberra market the most affordable in the country – it’s also set to be the fastest growing and best value.
Not only is the Canberra market the most affordable in the country – it’s also set to be the fastest growing.
Units on the other hand are another story. Just like most other Australian states, Canberra has seen their supply increase rapidly which has placed some downward pressure on prices. QBE forecasts estimate that, despite increases in supply, over the next three years the median unit price will increase by 2.4 per cent.
Buying property in Canberra
If you’re looking for a home in Canberra there are countless locations to consider. Get in touch with a reputable local real estate agent in the area to start your search, and you’ll be blown away by the value on offer.
Similarly, if you’re looking for an investment there are countless opportunities available. According to Your Investment Property, apartments near the universities or city centres such as Belconnen and Woden offer impressive yields.
Speak to an agent with experience in buying and selling investment properties in the area for the best results.