Canberra February 2018

The month in review: Canberra

By Herron Todd White
February 2018

The Canberra residential market is complex with many factors interacting to affect demand, supply and ultimately price. On a macro level, the Canberra residential market aided by historically low interest rates has a number of underlying positives including generally strong employment and a perception of good job security. There is depth in Canberra’s residential market and it is seen as one of the strongest markets in Australia. A negative aspect however is the limited population growth.

At a micro level the local ACT economy remains resilient in the face of continued job losses and Government cutbacks. Negative market sentiment though is a real risk in Canberra given the dependency on the public sector both for direct and indirect employment.

In general the housing market has experienced a period of strengthening market activity over the past 12 months. Underpinned by low interest rates, limited new housing supply and the Mr Fluffy buy-back scheme, house prices have seen strong growth. The development of Canberra’s light rail is also viewed as a strong attraction for buyers to Canberra’s inner north suburbs and the Gungahlin district.

Many suburb sales records were achieved throughout 2017 in the standard residential dwelling market. Notable sales include a property in Hunter Street, Deakin for $5.75 million and a record sale in Mclachlan Crescent, Weetangera for $1.551 million. There has been significant growth in established suburbs especially in the Woden Valley, inner north and inner south. We expect this trend to continue throughout 2018 in suburban areas of Weston Creek and Woden Valley and regions within close proximity to the light rail network.

The Mr Fluffy Asbestos Removal Scheme is continuing with all land sales likely to be completed in 2018. Overall the resale of affected blocks was strong in 2017 with the highest sales exceeding $2 million in the inner south suburbs. As a result of these sales and zoning changes allowing dual occupancy development there will be streetscape changes to many established suburbs. 2018 will see this change continue and also the introduction of these completed developments into the market.

The number of new apartments coming onto the market has continued to build with more stock expected during the start of 2018. The threat of over-saturation is a very real one and continues to be observed in several market segments including the Flemington Road corridor in Gungahlin and the Belconnen Town Centre. There has also been significant apartment growth in Molongolo Valley and Tuggeranong Town Centre. We have seen some value reduction in the unit market, generally in the outer locations. Well located central developments in the city centre and in close proximity to town centres are less likely to experience value reductions. Overall, minimal value growth is predicted in the unit market.

We anticipate 2018 will be a year of continued growth with demand shifting further away from the unit market in most segments and towards new and established detached houses.

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