Our nation’s capital is undeniably one of Australia’s hottest property markets, and it’s showing no signs of slowing down. Coming off the back of six consecutive years of house price growth, we take a look at what’s still to come for Canberra.
Median house price
Median house rental
$560 per week
Annual house growth rate
Median apartment price
Median apartment rental
$465 per week
Annual apartment growth rate
Rental vacancy Rate
Tenure of property
12% fully owned
Most expensive suburbs
Forrest, Yarralumla, Griffith, Reid
Lyons, Curtin, Woden Valley, Queanbeyan
Although the smallest of the Australian states and territories, the ACT is undeniably playing in the big leagues — especially when it comes to the property market. Canberra is the fastest growing city in the country, with the population increasing by 8,700 people every year and a growth rate of just over two percent annually. Just a decade from now, the Australian Bureau of Statistics forecasts Canberra will be home to over half a million people.
Canberra didn’t follow Sydney into a major market boom, but with Sydney now on the downturn, the nation’s capital is still on the rise. The ACT has more growth suburbs than any other state or territory in the country, and the reasons why are endemic to the identity of Canberra itself. Canberra is cocooned from many of the market forces affecting other capital cities: economic growth is consistently strong, jobs are stable, unemployment sits under five percent and Canberra has the highest average income in the nation.
Brett Smith, the Project Director of Art Group (one of Canberra’s most prolific developers) says this upturn will continue as long as the economy of the region is stable.
“Property owners have experienced Canberra bucking the national trend, recording six consecutive years of house price growth and more stability within the market than Melbourne and Sydney. Canberra hasn’t had the property bubble effect or impact, but it’s remained stable due to the strong economy,” he said.
“There’s a good balance of activity, open spaces and parks, culture and community, so both individuals and families are drawn here for an easier, less chaotic lifestyle.”
One of the key differences that separates Canberra from other capital city markets across the country is the tenure of property. Canberra is a leasehold only market, as opposed to Queensland where the majority of buyers of new property own the land freehold. In a leasehold tenure, the land is owned for a fixed-term and this lease must be renewed once that lease term expires. In the case of Canberra, when the lease expires, land is reverted back to the crown (the ACT government). Standard lease term from the crown in the ACT is 99 years, after which the lease is generally automatically renewed. Leasehold tenure is a very common model for owning property, especially in larger and more established markets like the UK, Hong Kong and Singapore. As a result of the leasehold tenure, stamp duty is fully tax-deductible in the ACT for investment properties, as it falls under a lease document expense. This, along with a myriad of other factors make the market a very attractive option for both local and interstate investors.
“We have been able to confidently offer some of our buyers a 2-year seven percent guaranteed gross rental return,” said Brett Smith in particular reference to their current market offering, On Forbes.
With an increasingly formidable investor market and a strengthening local market of working professionals, property developers in the ACT are turning their attention towards developing an ideal urban lifestyle. Buyers in the area are becoming increasingly more selective in terms of location, expecting great amenities while still embracing the local community vibe of the suburbs.
LJ Hooker Project Marketing’s Development Manager, Keenan Veraar, says Canberra buyers are more discerning than they used to be, focusing on the potential for lifestyle and value instead of just convenience and expecting more from their new homes.
“Developments in established, sought-after suburbs will always do well. The better an area is serviced and the closer to the city, the hotter the properties. People love to be in an established, leafy environment and tucked back from main roads but don’t want to sacrifice convenience,” he said.
“While the inner-north suburbs are ever popular, there are also a number of new suburbs that have been really well planned and are set amongst rolling hills, while still being connected to the CBD and Parliamentary Triangle,” said Mr Veraar.
Recent reports from credible analysts like Moody’s Analytics suggest notable price growth for both apartments and houses in the ACT not only in 2019 but for 2020 too. Within the last financial year, many Canberra suburbs have recorded double-digit price growth and many more areas sit around the eight or nine percent mark. A total of 31 suburbs recorded a median price growth of at least five percent, making the ACT the fastest and most consistently growing market in the country.
A key infrastructure project for Canberra is the new light rail system which is driving urbanisation along its route and offering improved public transport in a city that has always been best transited by car. The new financial year will also welcome in the abolition of stamp duty for first-home buyers on new-build homes, marking a big win for young ACT professionals. With a federal election coming up in May, a potential change in government may see public service numbers swell significantly, which would be a great outcome for Canberra in the medium term.
“With a more sustainable growth curve, Canberra still has a long way to go before it reaches the levels of the Sydney market, so I envisage decent growth across the whole market for the next few years, particularly if we see a change in the federal government”, said Mr Veraar.
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