Looking back: one year on since ‘doomsday’ predictions
Reflecting on where we were 12 months ago, market conditions in Canberra are nothing short of extraordinary. This time last year, concerns about the property market were in full swing, anticipating ‘doomsday’ predictions by way of analysts forecasting property owners were set for a bloodbath and predicting values would fall by 20-30%. As it turned out, most forecasts were woefully wrong, catching some wishful buyers off-guard when values started accelerating upward.
In the period since, each time a particular Government stimulus is ceasing, some analysts and outlets have chosen to reference it as a ‘cliff’, on the basis the economy will decline and, in turn, property values will fall. Neither has happened.
No more HomeBuilder, but off-plan interest is strong
The Federal Government HomeBuilder Scheme has recently concluded, leaving some prospective buyers to wonder if stimulus supported values and, once stimulus was removed, if values of new apartments and townhouses would fall. During April, both enquiries and the number of private appointments with prospective buyers have increased significantly, as has sales volume.
At this point, it appears market conditions for multi-unit dwellings continues to improve with plenty of room for values to accelerate and play catch-up to houses. Disparity in growth to values is evidenced in CoreLogic Data for March showing values for houses increased 3.3% and units 0.7% during the month.
Property values have been steadily increasing throughout 2021 across the portfolio of apartments and townhouses I have sales data for. In the townhouse market in particular, it has been difficult to find the top of the market, as even the most bullish of prices can be caught up to by the market within a week or two. Early sales volume in April indicates buyer sentiment towards market conditions remains positive. Whilst buyers remain confident they can secure finance upon settlement, I anticipate they will continue buying off-plan property at a furious pace; especially those seeking to spend less than $700,000 who are finding it increasingly difficult to participate in the established market.
Throughout the remainder of 2021 it appears unlikely conditions will improve for buyers without market intervention. Choosing to sit on the sideline has proven to be detrimental as compounding increases to property values quickly outpace the ability for a household with median income to save a deposit.
For this reason, I expect more people will be attracted to purchasing off-plan as this allows them to fix their purchase price, maintain exposure to the market and continue saving to increase their deposit prior to settlement, which may be 12-36 months away.
Editor’s note: Sam Dodimead is the listing agent for a number of developments where off-plan purchases can be made.
With Sam Dodimead, local property professional and host of Canberra Property Podcast where you can get to know the consultants contributing toward delivery of new buildings. Stream from wherever you listen to podcasts.
Read the last market wrap here.
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