In last week’s Canberra market wrap I wrote about how our local property market had decoupled itself from the challenges faced by other capital cities nationally. As some jurisdictions tighten restrictions to combat community transmission of COVID-19, the ACT has been moving toward relaxing restrictions after not recording any news cases for over a month. Relaxing of restrictions demonstrates how successful ACT residents have been in managing the pandemic.
Market sentiment can be a key indicator of where values are potentially heading. High auction clearance rates, increasing stock levels and strong sales results indicate both buyers and sellers are comfortable with the short-term outlook and engaging in property transactions.
CoreLogic recently shared research and analysis on each capital city property market nationally, and explained our market conditions: “ACT has seen property value increases of 1.3% since March. While the performance of the ACT market may seem like an anomaly, the ACT dwelling market is one of the few markets performing as may be expected amid the record low cash rate setting. RBA research has noted that reductions in the cash rate typically increase property values over time, because debt becomes cheaper and purchasing capacity increases.”
Turbo charging cash rate decreases are changes to how borrowers’ serviceability is calculated, exponentially increasing borrowing capacity in this low rate environment. ACT has the highest median household income nationally further increasing potential benefit these changes have on our property market.
Corelogic also shared some interesting insights into the labour market in the ACT: “ABS payroll data shows the number of jobs across the financial and insurance industry in the ACT has actually increased 0.7% since the start of the pandemic”.
“A ‘two tiered’ state of the labour market is highlighted by the fact the ACT accommodation and food services sector has seen the largest rate of decline of the states and territories. This industry is more likely to be comprised of renters, and rental values have fallen half a percent across the ACT since March, with larger falls across the unit sector (-1.0%).
“It is also worth noting that while cumulative price changes show four of the eight capital city markets have not declined in value since March, almost all markets are showing a slowdown in growth rates. This suggests that, as with past downturns, most housing markets will be subject to a downswing phase.”
Increasing jobs for workers in finance and insurance provides a larger pool of people on higher incomes with the capacity to own property. Reported decreases in employment for food services and accommodation sectors means in the short term there may be fewer tenants seeking lower priced properties. However, as trade restrictions relax further over the medium to long term, there will likely be increasing employment of these workers, potentially creating upward pressure on rents at the lower end of the market.
This data further demonstrates our property market has decoupled itself from the challenges faced in other capital cities. A very fortunate position for property owners to be in.
With Sam Dodimead, local property professional and host of Canberra Property Podcast where you can get to know the consultants contributing toward deliver of new buildings. Stream from wherever you listen to podcasts.
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