WHY CANBERRA IS OUTSHINING MELBOURNE AND SYDNEY

By Nerida Conisbee

Canberra’s real estate engine is running red hot as the Autumn selling season begins, having survived the downturn seen in bigger cities.

The property market in the capital held steady between 2017 and 2019, while Sydney and Melbourne tumbled. Australia’s two biggest cities are now overtaking Canberra, but price growth in the ACT continues despite high development.

With millions more buyers on realestate.com.au compared to last year, the steady ACT market could be one to watch in 2020.

Price growth set to continue

Over the past 12 months, Canberra property prices have increased by 1.9% with houses the driving force. Units have declined by 0.7%, likely driven by the high levels of new development. The suburb of Mawson has seen the strongest unit price growth at 16.3%.

Search activity is up 26%, but listings remain down compared to the same time last year. The limited availability of properties for sale will likely result in increased buyer competition

Prices stable despite plans for more development

The ACT has experienced the third-highest level of development relative to state population in the past 35 years, behind Western Australia and Queensland. Despite the very high levels of supply, property prices have remained relatively stable and rents continue to increase

This result is surprising given cities that rely heavily on government employment don’t typically see strong employment growth, which pushes up demand for housing.

Canberra will always be dominated by government-related employment, but a steady diversification of the ACT economy could be a factor here.

First home buyers and investors the main players

The federal government’s 5% deposit scheme has been incredibly popular since it began on 1 January 2020. It is one of the driving factors behind a jump in first home buyer enquiries on realestate.com.au for Canberra, which saw an increase of 71% in January 2020 compared to the same period last year.

Investors also appear to be back in force with email enquiries now up more than 32% compared to the same time last year – the biggest jump we have seen in Australia.

In direct contrast to first home buyers, who are hunting for houses, the focus for investors is very much on apartments.

Rental demand to remain strong

Canberra units have seen stronger rental growth compared to houses over the past 12 months, despite the high number of new developments. The upward trend likely reflects the increasing quality of properties.

The suburb of Yarralumla has seen the strongest growth in unit rents with an increase of 33%, despite it being one of Canberra’s most expensive areas.

Article extrapolated from:

Nerida Conisbee ( 12 Mar 2020 ) Why Canberra is outshining Melbourne and Sydney. Available at: https://www.realestate.com.au/news/why-canberras-property-market-is-outshining-melbourne-and-sydney/