A shortage of stock, falling interest rates and a high level of demand for family homes made 2016 one of the Canberra property market’s strongest years on record. Industry experts believe the momentum will continue in 2017.
Domain chief economist Andrew Wilson expects more solid growth for the year ahead.
“The Canberra market heads into this year with a full head of steam,” Dr Wilson says.
“We’re not talking a real boom in prices here. It’s been a recovery from a quiet period and now it’s a consolidation of that recovery going forward.”
LJ Hooker Dickson principal Stephen Bunday says he expects 2017 will be “business as usual”.
“Money remains cheap and accessible and the supply remains low,” Bunday says. “I can’t see why that would suddenly change – the demand is there.”
More good news for sellers (but not such good news for local buyers) is that interstate buyers are beginning to take note of Canberra’s high rental returns and affordability compared to Sydney and Melbourne.
Peter Blackshaw Manuka agent Mario Sanfrancesco says he is fielding more inquiries from buyers hoping to invest in the nation’s capital.
“It’s absolutely beginning to occur now,” Sanfrancesco says. “Purchasers are finding our properties are providing a wonderful buying opportunity compared to what’s happening in their cities.”
Sanfrancesco says properties that are low maintenance, close to amenity and offer a reasonable return are particularly attractive to investors.
Luton Properties director Richard Luton says interstate owner-occupiers are also on the rise.
He says many Sydney and Melbourne buyers are hoping to call the ACT home and are drawn to Canberra’s comparably low house prices and the quality of its infrastructure.
Million-dollar sales occurred in all of the ACT’s districts last year, which bodes well for further price growth this year.
Luton says he expects inner suburbs such as Downer and Watson in the north and Narrabundah in the south will experience a growth spurt that has already happened in more central suburbs.
He says Aranda, Cook, Macquarie and Crace – suburbs within easy reach of the city, but are not necessarily inner suburbs – are also experiencing growth.
Sanfrancesco believes more properties will be sold under the hammer – a continuation on last year’s uptake of auction sales.
“We’ve seen an increased percentage of properties sold at auction and buyer feedback is that it’s the most transparent method of sale,” Mr Sanfrancesco says.
Dr Wilson says while the market is set to strengthen this year, usual factors such as interest rates and the outcome of the 2017-18 federal budget will be key drivers.
“A lot will depend on where interest rates fall this year and I think we’re going to see higher effective rates this year. Even though we’ve got a chance of lower official rates, I’m not sure the banks are going to pass them on,” Dr Wilson says.
“If rates are stable officially this year, I think buyers are going to push up rates and that will act to moderate price growth and affordability.
Dr Wilson says there’s no doubt that a better sentiment for last year’s budget contributed to the market’s momentum. The 2017-18 budget, to be handed down in May, will help determine how consumer confidence continues.
What you’ll see more of in 2017
Investors: Low interest rates and a solid market have drawn more investors to property. The returns on a Canberra property are also very high when compared to other capital cities.
Interstate buyers: Some of these investors will come from interstate. While some are simply hoping to take advantage of Canberra’s high rental yields and lower price point, others are wanting to make the city home.
Auctions: As the market has become more competitive, more vendors have opted for the auction method. According to Allhomes data, almost half of November’s house sales were secured via auction. This looks set to continue.