Canberra’s property market conditions are exceptional for prospective vendors, however, are proving challenging for buyers. Low stock volumes, high auction clearance rates and significant buyer demand across the market, fuelled by high rates of employment and low borrowing costs, have turned up the heat on Canberra’s property market. Evidenced by CoreLogic reporting, house values increased by 1.1% and unit values by 0.73% during October. An interesting dynamic has emerged; even though values of houses increased by more than units in October, their growth rate of 1.8% in comparison to 2.4% for units remains far lower over a quarter.
Purchasers face a conundrum of determining value in a market which is accelerating away from them. Waiting just one month to eventually purchase at the median value would require paying an extra $8,117.30 for a house or $3,375.28 for a unit based on figures for October. Domain data showed the average auction clearance rate in October exceeded 80%. Agents have regularly been reporting sale prices exceeding reserves by significant margins. Even vendors with ambitious expectations are finding buyers, although post auction negotiations may be required.
Those finding the market for established properties too hot are finding similarly competitive conditions in new developments. Stock able to settle in a similar timeframe to established properties is generating significant enquiry volumes. A great example of this are two townhouses in a project I am selling. Within 24 hours of advertising, instructions were issued on both, and they generated over 100 new enquiries last week.
Time to secure the Federal Government’s $25,000 HomeBuilder Grant is passing quickly. As I explained in this column last week, allow time for contracts to exchange prior to the holiday season; the deadline for making decisions is around 1 December. Those anticipating better buying opportunities and a falling market once the HomeBuilder Scheme has expired are set to be disappointed. Federal and ACT Government stimulus policies had a critical overlap where once $25,000 cash grants ceased, opportunities remain for buyers of new properties to secure no, or discounted stamp duty. In practice, ACT Government stimulus had a far broader application encompassing a cohort of buyers who could not wait for construction timeframes, or do not meet means testing requirements. Saving post-tax dollars would take many singles earning up to $125,000 and couples earning up to $200,000 per annum a significant amount of time to save the equivalent to $25,000, even longer once compounding property value growth is accounted for, therefore increasing the importance of acting quickly to secure government incentives and getting a foothold into the property market.
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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