The nation’s capital is hot now!

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While the average August temperature in Canberra is a mere 13.5 degrees Celsius, the property market could be heating up.

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CommSec’s latest State of the States report, which analyses indicators over eight key economic areas, shows us that the Australian Capital Territory has the highest home lending rates in the country. This is positive news if you are looking at buying property in nation’s capital.

It’s not just housing finance figures that suggest things are going well for Canberra. The ACT is ranked third overall for economic growth and retail spending in CommSec’s report, after NSW and Victoria.

Strong home lending figures in the ACT suggest a solid real estate market. And new buildings are the ACT’s strong point. The recent State of the States report suggests that the ACT is in the second spot for construction of new dwellings after NSW.

If you are based elsewhere in the country, you’ll be interested to note that home lending is generally on the increase, with the exception of the Northern Territory and Western Australia, where lending is lower than their decade average.

What’s driving lending in the ACT?

Population growth could be one factor driving lending and new home construction in the nation’s capital. The State of the States report shows that the ACT has the second highest population growth, after Victoria. Population growth leads to financial growth, as more people are spending, and more people need homes.

Other data shows that the market is in good shape in the nation’s capital. The latest Domain report, by economist Andrew Wilson, found that Canberra’s median house prices recently reached a new peak at $723,299.

The Domain report, however, found that although house prices are rising, unit prices are falling, which suggests there may be an oversupply of apartments in the ACT.

Under the hammer

Auction results are also strong in Canberra. In fact, recent CoreLogic data suggests that clearance rates are high in most capital cities, compared with this time last year.

Auction clearance rates in Canberra in the last quarter were strong, although Melbourne and Sydney still had higher auction clearance rates, with significantly more houses going to auction. This is to be expected, given the larger population. Now could be a good time to put your property under the hammer.

Looking forward

Returning to the quarterly CommSec report, we see that even though the ACT is strong in housing finance, construction and retail, NSW is the top-performing economy, with high scores across a number of different categories. Victoria is in the second spot. The ACT has dropped from second to the third strongest economy over all indicators, due to a softening of the job market, compared with last quarter.

Economic momentum, though, is going well in the nation’s capital, according to the CommSec report. The ACT tops three of the eight annual growth categories: retail, construction and home starts. This news could be enough to keep Canberrans warm this winter.

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