Despite a tough few years of stagnant property growth and public service hits, Canberra recorded a solid 2016. The prospects for continued gains are positive; as long as you pick the right market.
What went down in 2016
Looking back, 2016 provided a nice solid, and more importantly, stable year for the detached property market. The majority of suburbs in the far south and inner north saw an annual growth between 5-10% according to the recently released CoreLogic Mapping the Market report. Inner south suburbs – Yarralumla, Deakin, Kingston and Griffith – performed better, averaging a greater than 10% return. Good news for investors in these areas.
The apartment market saw many suburbs experience very little to no growth, with some seeing slight declines in property values. The outer Tuggeranong, Woden and Belconnen suburbs were hardest hit likely due to the sheer number of apartments becoming available within these areas.
The Mr Fluffy saga continued throughout the year with restored blocks of land starting to reenter the market. Of the more than 1000 asbestos affected homes it is estimated roughly 400 blocks will become available in already established suburbs. This significant step forward is thanks to the ACT Government completing their buy back scheme over recent years.
The recent Labor win at the hotly contested ACT Election reinforced the voters support for a light rail system throughout the National Capital. The first stage, connecting the City to Gungahlin, is well underway with construction already extending along the Northbourne Avenue thouroughfare. Services should begin operation early in 2019.
Also in transport news, the recently overhauled Canberra Airport reestablished it’s international scheduled services. Singapore Airlines commenced their daily service connecting Canberra to both Singapore and Wellington. This increased accessibility is set to have a significant impact on visitor numbers.
And lastly, the Labor Government continued their push to lower stamp duty on property sales in an effort to aid first home buyers. The Government revenue stream now shifts to all property owners through stepped increases in annual rates. While last year saw only a slight rates increase across the board it is expected that much of the pain for investors may be yet to come.
So where does that leave Canberra in 2017?
In a good place says Cameron Kusher, Head of Research at CoreLogic. Kusher projects Canberra will see a 9-10% average growth in the detached housing market based in part on the state’s low unemployment figures. The latest December labour market statistics show Canberra’s 3.7% second only to NT’s 3.6%. New South Wales rounds out the top three with a noticeable jump to 5.2%.
This buoyant view of the Canberra market is further upheld in Herron Todd White‘s monthly status snapshot. Their nationwide property clock pitches the national capital in a rising market for detached housing.
Apartments, on the other hand, may prove a different beast altogether. The outer suburbs – Belconnen, Gungahlin, Woden and Tuggeranong – will all see a significant number of units completed during 2017. After a sluggish 2016 it is expected the softening of the market will continue to have an impact on resale values and rental returns. Herron Todd White are currently placing Canberra apartments in a declining market.
Inner city apartments in Braddon and Kingston, with their smaller volume and proximity to lifestyle precincts, seem to be the better investment option in this space.
New development and suburb expansion will continue in the western Gungahlin and Molonglo Valley corridors throughout the year.
Early stage 2 planning for Canberra’s light rail system is currently underway, extending the network from the City, over Lake Burley Griffin, and through to the Woden precinct. Look for announcements throughout the year.
And lastly in a boon for tourism, Canberra Airport have announced Qatar Airlines will be delivering a Canberra to Dohar direct route either later this year or early 2018.
Our picks for the suburbs to watch in 2017 include the the inner south suburbs – Curtin, Hughes, Lyons, Wright and Coombs for detached housing.
In the apartment market, Braddon and Kingston look promising.
Tim is a property investment mentor and educator who has had the opportunity and privilege to work with hundreds of first time and seasoned investors, helping them build multi property portfolios and realise the possibilities of being successful in property. He can be contacted via email at [email protected]