Canberra values increase, rental vacancy declines
Maintaining an active role in the property market has provided an opportunity to hear some interesting perspectives on how people perceive market conditions. In one camp, there are people who see current conditions as ideal for being decisive. They have noticed the lack of opportunities and understand demand across the market makes buying competitive. Another group of participants seem to be holding onto hope that conditions will deteriorate, allowing them to purchase for significantly less than current pricing.
For a couple of weeks in April it appeared as though the second cohort could have been right. Since then, market tailwinds have started to assist values increase in Canberra.
Without digging too deeply, these tailwinds can be seen by suburb record sale prices being exceeded during the month in McKellar, Moncrieff, Theodore, Hawker and Duffy. Sale prices demonstrate how lack of quality stock has been creating upward pressure on values in the middle band of the market, values which sit between $800,000 and $2,000,000. Strong auction clearance rates, often exceeding 80%, are further evidence of robust buyer demand.
In the new market, the $25,000 HomeBuilder Grant has proven to be a driving catalyst of buying decisions. Feedback from purchasers who’ve met the eligibility criteria has been the HomeBuilder Grant represents a significant proportion of purchase price and, in the context of required time to save a similar amount, it made sense to take advantage of it. Eventual owner occupiers who don’t meet the eligibility criteria can still receive benefit by paying no duty on new properties priced up to $500,000 or receive $11,400 discount on their payable duty for purchase prices between $500,001 and $750,000.
The rental market in Canberra has proven to be exceptionally resilient. SQM Research reported Canberra has the highest capital city asking rents nationally and a steadily declining vacancy rate, now 1%.
Louis Christopher, Managing Director of SQM Research, said “rental vacancy rates for most capital cities recorded a decline over the course of July”.
“We are now observing a clear trend of reduced rental vacancies in outer suburban locations and regional locations around Australia. However, when looking into the numbers it is clear there are still very elevated levels of rental vacancies in the inner-city locations. We believe there has been a move towards outer regional living and away from high density areas. This very likely has been as a result of fears surrounding coronavirus and the ability for many employees (particularly in the corporate sector) to work remotely.”
Mr Christopher was one of the first market analysts to use coronavirus as a catalyst to forecast property values would significantly decline, up to 30% in one case. His current analysis on migration and employment trends would increase market demand and support property values increasing in Canberra; especially as Canberra provides the benefits of regional living with the connectivity and amenity of a city.
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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