Australians have had a long history of being home owners. Property has been considered a lucrative and popular venture for many. The evidence of this is through the many ventures that revolve around property.
The Situation of the Property Market in Canberra – Past and Present
As of July 2016, Canberra has experienced increased growth which has had an effect on rent. Figures show that rent increased by about 2% over the past year. This signifies an annual rental growth.
As at 2014, there was a boom in the property market. The most sought after properties included areas that are near major infrastructure. Moreover, established homes came off as the most vibrant market especially those that came with land as part and parcel of it.
According to Adelaide Bank, there is a concession that there’s significant growth in sectors of the Canberra market. The only area that was not doing well was the apartment market – which was oversupplied.
The resident population of Canberra being about 350,000 could not meet this oversupply. We can deduce that in this year the market was more inclined towards buyers.
As at 2015, the tide was now turning to sellers. People were now developing the interest in older properties on larger blocks. This had a devastating effect on the market of apartments coupled with the low population of Canberra.
A review done on March 2015 sees this surge in supply of apartments as an issue of concern. This is because a high supply of apartments will push investors and landlords to make adjustments with regard to rent. They will lower their rents in order to forestall the possibility of their properties to remain vacant. It would even be more devastating when the market rate drops.
With regard to mortgage interest rates, it can be said that Canberra is enjoying the lowest interest rates ever. The property market has in a way been strengthened by this low-interest rates coupled with low levels of unemployment in the Australian Capital Territory (ACT).
The most vibrant markets at present are the one of the homes under $ 750,000 and that one for homes that provide an upmarket standard of accommodation.
It has been observed that as the property market of Canberra extends outwards in outreach, the price of the inner suburbs shoots up. Thus there should be an anticipation for increased demand of homes in well-established suburbs.
Over the past decade, a trend can be noticed in Canberra. There is a continual fall in the number of homes being constructed in comparison to apartments. This is what is contributing to the oversupply of apartments. In addition to this, the vacancy rate of houses in Canberra has been ranked as the second lowest.
The aspect of oversupply is what is being emphasized on. Banks are even capping lending for most suburban areas in Canberra so as to check on the spurt of apartments.
An observation of the behavior of most borrowers in Canberra shows that they are conservative. Even so, the oversupply was the impeding factor which had to be capped by all means.
If you are a keen and close follower of the property market, you must be part of the adherents to the notion that property value doubles after every decade. Well, this notion can’t be quashed. We can deduce whether it is true or not.
Many developments can take place in 10 years. The changes that have had an effect on the property market in Canberra are as follows:
It goes automatically that population growth is one of the forces that promote the development of property. It brings the need for residential and household property to cater for the housing of growing population. Thus, we can say that the property value has increased commensurately. Household wealth has also increased. The two form a perfect combination that ultimately leads to the development of property.
The sale, marketing, and purchase of property in Canberra have drastically changed in the past decade. For example, about ten years ago, advertisements were mostly in print format. Nowadays, the advertising has shifted online.
Large Number Of Investors In The Sector
At present, it is estimated that there are over 2 million investors in the Australian property market. The sector has seen robust growth due to this pool of investors.
Over the past decade, access to finance in Australia has proved hard. As compared to the provisions that were available in the past such as the low-doc and no-doc loans, banks used to lend out money so easily. However, at the moment, there are lending caps especially if you are borrowing for investment in the property market.
The upside with regard to finance is that the home loan rate has decreased from 10% in 2006 to 5 % at present.
No doubt we are in the information age. The property market too is not left behind. Over the past decade, the volume of property related information has increased. It has also become easily accessible creating a population of well-informed investors and buyers of property. Most of the information is found online. It is easy for one to conduct extensive research on the property market at present and make an informed decision. Even so, there are cases of misinformation which has been detrimental to many investors.
With regard to the price of property over the last ten years, a trend can also be noted.
In the whole of Australia, the prices of houses increased over the past decade. The figures prove so, even in Canberra. As at 2006, the median house price was at $330,000, and the median unit price was at $ 310,000. At present, the median house price is at $499,000 and the unit price at $445,000.
In the Australian Capital Territory, the figures are as follows for those areas in which property value doubled:
- Turner 110% ( $650,000-1,362,000)
- O’Connor 104% ($470,000-$960,000)
- Ainslie 101% ($460,000-925,000)
In essence, we can conclude that, yes, property value increased, but this increase was not in all areas.
In 2017, the property market is expected to be revamped. The oversupplies are expected to be met with actual demand. A report by the Housing Industry of Australia estimates that will be a higher rate of building of homes in the ACT that will exceed demographic demand. This will reduce the lag that had accumulated over the past decade.
With a moderate population growth, there will be an ease in the pressure mounted on the Canberra property market. There is a specific demand that will be brought about by migration inflows. This will be largely because of the increase in the number of overseas students.
The rental growth rate will slow down significantly while vacancy rates will go up marginally.
There is also an uncertainty in the Canberra property market. This uncertainty is normally brought about by the fact that Canberra is the ACT. This means that it is the political center of the federal government of Australia. Thus, political influence and events will be rampant and would greatly affect investment behavior. These political forces bring about uncertainty to property investors, which is never good for any business.
In conclusion, the above trends have presented the developments over the past decade and also the projection in the coming years. Therefore as a property investor, property analysts or even home buyer, be informed in your venture into the Canberra property market.