ACT Property Watch Q1 2013
The following Property Watch report is the result of an investigation into the historic and current market conditions of the Australian Capital Territory (ACT), with a focus on the Canberra residential market.
The forthcoming federal election is yet to impact the Canberra market, with a continued growth in house prices. The Adelaide Bank / REIA Housing affordability report placed Canberra as the most affordable capital for the December quarter, with 18.7 per cent of the median income required to pay a home loan compared to the national average of 30.4 per cent.
The Median price of a unit has fallen by 2.4 per cent in the 12 months to December 2012 as a large number of unit developments were completed over the year. However, indicators for the first quarter in 2013 point to strong enquiry and rising prices in most regions of the city. The moderate growth expected in the short term may slow in the second half of the year as promised job cuts come into force.
The median house price firmed slightly, recording a 1.1 per cent rise between December 2011 and the corresponding period in 2012. House activity increased in the second half of 2012 after recording low transaction numbers in the first half of the year; improved business and consumer confidence and a lower interest rate attracted buyers back into the market. The Gungahlin district accounted for four of the most active house markets in the second half of 2012, while Kambah in the Tuggeranong district recorded the single highest number of sales with 68 transactions. Kingston, Belconnen and Bruce represented the largest unit markets.
The unit price point distribution over the second half of 2012 highlighted a concentration of transactions in the $400,000 to $499,999 price bracket. This market segment remained Canberras largest since December 2009, capturing 30 per cent of the market. The unit market has seen less segmentation, with 73 per cent of strata-titled dwellings transacting between $300,000 and $500,000. The median price for one, two and three bedroom units remained within this price range.
The House and Unit Activity table below pointed to a slowing activity between the six months to December in 2012 and the corresponding period in 2011. Kambah recorded the highest number of house sales for the year and experienced a stable median price over the period along with the Gungahlin regions suburb of Macgregor. Unit activity declined in Kingston and Belconnen, while in northern Canberra the suburbs of Bruce, Braddon and Lyneham experienced rising sales numbers despite a small decline in median prices.
Investor activity intensified since January, with approximately one third of all new enquiries originating from non-owner occupiers. Tenants benefited from an increasing selection of properties, with softer rent prices in the year to December 2012 and more units under construction or nearing completion in the inner city forcing downward adjustments to weekly rents. In the 12 months to December two bedroom units were the only dwelling type to record a rise in median rent price (1 per cent), while rents for all other dwelling types softened. Two bedroom units also performed strongly in the Tuggeranong Area, with a flat activity across three bedroom units and houses. The Woden and Weston Creek region performed well with demand for single bedroom apartments and three bedroom houses leading to a rise in median rent.
An increase in vacancy rate to 1.5 per cent in January signalled some relief to tenants seeking new accommodation, although landlords who met the market continued to experience short leasing periods. Affordability remained an issue for tenants, while the change in tenant mix forced some landlords to turn furnished apartments into vacant units in order to regenerate demand, as the number of transient residents declined.
PRDnationwide Research expects the market to support current prices, with small gains achieved in established suburbs. However, the team does not expect substantial increases in value given Septembers election and uncertainty in the broader economy.