On Saturday 22 May, Domain reported Canberra recorded a preliminary auction clearance rate of 92%. For some, strong auction clearance rates and the current growth cycle is putting their dream of owning a property further and further out of reach. Understanding affordability is relative to individual circumstances, and for the last few months I have focused on explaining why the off-plan multi-unit market provides a much lower barrier to entry.
Time in the market, defined as duration of property ownership rather than timing the market and picking the best time to buy, has historically proven to deliver far better returns in Canberra. Buying off-plan locks in the purchase price at exchange of contracts and provides 12-36 months to improve financial circumstances. To own established property, buyers need to be in the position to settle within 30-60 days. For those concerned about affordability, buying off-plan is an opportunity to participate in the market without holding costs and have time to keep saving and improve their financial circumstances before settlement.
Other factors driving increasing values of multi-unit dwellings include interstate migration. According to the Australian Bureau of Statistics, the ACT had a net interstate migration increase of 699 people in December quarter 2020, an increase of 650 people compared to the same period in 2019. New developments also face pressure from labour and material shortages increasing costs and potentially delaying completion of projects.
I have found the strategies used to improve investment returns work even better for owner occupiers who are looking for their first, or next home as they receive the benefit of stamp duty concessions and discounts. High level statements from agents describing market conditions as ‘good’ so people should consider buying or selling fail to provide any tactical advice as to why. Especially in the case of selling where there are plenty of agents promoting why people should sell established houses without offering any insight into where the opportunities are within those markets to buy back in.
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.
Editor’s note: Sam Dodimead is the listing agent for a number of developments where off-plan purchases can be made.
Read last week’s market wrap here.
Find property listings at Canberra Daily Real Estate.
