The month in review: Canberra
By Herron Todd White
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.
Near record low interest rates and low unemployment levels have resulted in continued strength in the ACT economy and property market, particularly the residential sector. Despite market uncertainty in the lead up to the September 2013 Federal election and the subsequent restructuring and downsizing of the Australian public service in late 2013 and early 2014, the ACT property market and the broader economy have remained resilient.
Recent rate cuts are expected to boost the property market at all levels for both owner occupiers and investors. The sub $750,000 housing market is expected to receive the most positive change as the cuts are likely to positively impact buyers in this market sector the most. The prestige housing market is expected to remain steady, however we have seen strong recent sales activity in the $2.5 million plus housing market. Some improvement is expected for the unit investor market as cash becomes cheaper, however high supply levels remain a concern. The high supply levels have meant unit landlords and investors have had to adjust rental expectations in line with the market to avoid vacancies. This rental trend is expected to continue. Overall, 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.
The impact of Mr Fluffy asbestos contaminated homes and the eventual removal of these properties from the market will have a positive effect on the broader ACT economy and increase demand levels for housing in the mid market point. Accordingly, demand for residential property is set to increase.
Given current stock levels both for sale and rent, softening dwelling commencement numbers and increased demand levels, we anticipate the residential market in the ACT to tighten over the short term and prices to firm.
Small segments of the market including units along the Flemington Road corridor in Gungahlin are expected to remain soft plus those properties situated in less sought after locations or providing inferior accommodation.