National Property Report – May 2016

NEW SOUTH WALES

Sydney investors look afield for more bang for their buck

While the phenomenon of the Sydney market has held the fascination of investors for several years, some of its neighbouring regional centres have been quietly strengthening their position as property hotspots

In terms of annualised growth, there’s no denying the list of high achievers is dominated by greater Sydney suburbs. Long-term top performers, according to CoreLogic RP Data statistics, include inner-city suburb Ultimo at 12.3% annual growth – 114% over three years – and Eastern Creek in Blacktown, with 13.4% annual growth.

But the list is full of surprises, as regional centres pop up among the highest-growth suburbs with surprising frequency. For example, Myocum and Mullumbimby in NSW’s far north region of Byron have seen robust growth over the past five years, and Kiama Heights in Kiama and Primbee in Wollongong have shown steady annual growth of almost 8%.

Popular regional hubs offer affordability

Trendy port city Newcastle, the second-most populous metropolitan hub in NSW, has transformed from a coal export harbour to a desirable beachside destination which is increasingly attracting investors. General manager of Robinson Property Matthew Waddell says access to the entertainment and lifestyle of Newcastle is key to tenant demand.

“The most popular areas are the beachside suburbs like Merewether, Bar Beach and Cooks Hill, with growth subsequently being experienced as buyers are pushed out due to affordability,” he says. “This has been the cause of recent growth in suburbs like Adamstown, Hamilton and Lambton.”

Historically, Waddell says Newcastle is a more stable market than Sydney, with less erratic swings in prices. CoreLogic RP Data’s historical data shows positive growth for all suburbs in the Greater

Newcastle area, with few declines in value, reflecting the region’s rising popularity.

“Our market has matured, so we’re not as influenced by what’s happening in Sydney,” says Waddell. “We do expect a lot more Sydney investors to purchase in Newcastle due to the affordability and higher returns.”

Believing that buyers who can’t afford the city’s $1m median will look to the more affordable outer ring, Waddell says “suburbs such as Kotara, Charlestown, Kahibah and Elermore Vale will see more buyer activity and price growth”.

On the other side of Sydney, 85km southof the CBD, regional centre Wollongong is benefiting from the overflow of Sydney’s 2015 growth, with stellar property value hikes in the year to March. Warrawong and Magerton experienced 12-month growth above 20%, while coveted beachside suburb Wombarra recorded growth of 46%, CoreLogic RP Data reports.

Nick Viner, principal at Buyers Domain Buyer’s Agents, reasons that while Wollongong has strong growth prospects, “this is based upon its close proximity to Sydney and yet huge price differentials with the Sydney suburbs”, and he believes investors chasing capital growth should look closer to the capital.

Positives and pitfalls for Sydney

In the Sydney sector, Viner says concerns about a housing bubble have so far been unfounded, and auction clearance rates have recovered to over 70% after a collapse in December to 50%.

Advising investors to look within 5–7km of the CBD for best results, Viner also suggests looking for areas that offer value for money compared to neighbouring suburbs.

“The Inner West is still a good bet based upon its proximity to the CBD, universities, hospitals, schools and shops,” says Viner. “Rental demand in these areas is always strong, whilst capital growth in the Inner West increased even during the GFC.”

CoreLogic data shows Sydney dwelling prices grew by 1.01% in February, further confirming that its growth is increasing at the slowest rate in three years.

However, Sydney did up the ante on its rental returns, with a 1.1% annual increase in house rents, and 2.8% for units – but it wasn’t enough to move it out of second-to-last place for capital city yields.

Although Sydney’s global status and high demand will likely keep it in its place as Australia’s growth frontrunner, Viner warns there are still some marketplace traps to avoid. With rezoning high on government agendas, investors should take extra care to do their research before purchasing.

“If property owners are lucky, this can lead to windfall gains if their property is rezoned for high-rise apartments and becomes instantly attractive to developers,” says Viner. “However, owners can lose out if their property is not rezoned but others are, and their property then becomes surrounded by ugly high-rise apartment blocks.”

VICTORIA

Melbourne records bumper first quarter

Record auction results and stronger growth than Sydney’s have fortified Melbourne’s identity as one of Australia’s most desirable cities to live in

The Real Estate Institute of Victoria reported that March 2016’s auction bonanza had “broken the record for the highest number of homes sold in a single weekend”. The weekend saw 1,667 auctions held and an all-time high number of homes sold, at 1,004.

CEO of REIV Enzo Raimondo said statistics reported to REIV showed the clearance rate for Melbourne in April was 73%, adding that “there have been 11 suburbs with clearance rates above 90% this year, including Collingwood, Dingley Village and Seddon”.

A report compiled for Westpac by Herron Todd White also attested to Melbourne’s stunning auction results throughout 2015, stating that “the calendar year saw $27 billion worth of homes sold at auction – an increase of $6 billion from 2014”.

Melbourne’s demand is typified by its annual home value growth, which notched up the highest capital city appreciation from February 2015 to February 2016 at 9.82%, surpassing Sydney’s by almost 2%, CoreLogic RP Data reports.

REIV data shows that the final quarter of 2015 saw regional Victoria outgun Melbourne’s growth, with an increase in house prices of 2.2% and 2.3% for units. “We’ve seen prices in major regional areas within 90 minutes of Melbourne grow in price, suggesting city commuters are looking further afield for lifestyle and value reasons,” said REIV’s Enzo Raimondo in a January news release.

The data also revealed an uptick in towns and cities further from the metropolitan area, such as Bairnsdale, Echuca, Swan Hill, Mildura and Warrnambool.

Echuca’s unit prices have experienced growth of 8% in 12 months, February CoreLogic statistics state, which can be attributed in part to firm unit demand in central Echuca.

Mildura saw positive growth values in all suburbs over the 12 months, and Warrnambool houses increased 2% in the same timeframe. Warrnambool units were unchanged.

Buyer’s agent Wendy Chamberlain, co-founder of Amalain Buyer’s Agents, says investors looking for regional properties should look for areas with economic diversity. “If you’re looking at an area with only one key driver, such as a mining town, you’re putting all your investing eggs in the one basket, with reliance on a single industry,” warns Chamberlain.

In metropolitan Melbourne, Chamberlain describes the market as “many-tiered”, with demand high for family homes but weak for units due to excess supply on the market.

CoreLogic data shows Melbourne, North Melbourne and Docklands units reporting negative growth between 3% and 4% from February 2015 to February 2016. Units were winners in Kensington and West Melbourne, with growth of 10% and 13% respectively. East Melbourne netted the highest 12-month growth in metro dwellings, rising by 23%.

Due to high development in some locations, buying inner-city off-the-plan dwellings may take some time to realise growth, says Chamberlain. “Stick to well-located, in-demand properties that are not your run-of-the-mill ‘cookie cutter’ apartment,” she advises.

“Go for originality and something a little unique, such as art deco features, warehouse conversions, and older-style apartments in boutique blocks.”

For example, Elwood provides an eclectic mix of large family homes, period detached and semi-detached dwellings from various eras, and distinctive art deco apartments. A quickly gentrifying suburb close to the CBD, Elwood’s house growth spiked 21% in the year to February 2016, CoreLogic data states.

A Westpac report compiled by Herron Todd White notes that some areas of Melbourne are recording higher volumes of sales in the wake of foreign investor withdrawal, and estimates that

Glen Waverley and Mount Waverley prices dropped between 5% and 10% at the beginning of 2016.

“We are seeing more stock on the market in these locations and buyers can afford to be picky. It’s quite a different situation from early 2015, when buyers often felt compelled to grab any property that fell within their budget,” the report states.

“This presents a clear opportunity for upgraders to enter these highly sought-after markets.”

While changes to lending criteria and dwelling prices outpacing wage growth are conspiring to subdue investor input, Chamberlain says employment opportunities provide a counterbalance, with the healthcare and social assistance and other sectors looking set to grow.

“This, coupled with low interest rates, may continue to frustrate regulators’ attempts to temper the market.”

QUEENSLAND

Brisbane on cloud nine after pricing boost

Experts are gearing up for a good finish to the year for Brisbane, after the first quarter of 2016 has shown that Brisbane isn’t slowing down in line with its southern cousins

Historical trends show that the Brisbane market experiences an upward sweep following booms in

Sydney and Melbourne, and data to date has revealed that is just the case right now.

CoreLogic RP Data’s Housing Market and Economic Update report shows that Brisbane dwelling prices have gained 5.5% growth, jumping 1.8% in February 2016 alone – a significant increase in comparison to Sydney’s 0.5%.

Population growth, low interest rates and comparable affordability are boosting Brisbane’s attractiveness to investors – particularly Sydney investors who are now priced out of their own market.

“For a property investor, Brisbane is definitely one of the better markets around the country at the moment,” says Phil Game, principal and buyer’s agent at Astute Realty.

While he says units in the city – which are at risk of oversaturation, with more development to come – could still be a good option for investors with a long-term outlook, he instead directs his buyers to outer suburbs such as Nundah and Chermside, both of which are returning average yields of 5%, with medians of around $415,000.

Qld up, regional centres down

Looking outside of Brisbane, Game says that due to the volatility of industries that support regional townships, staying focused on Southeast Queensland is a safer option.

“The biggest risk is that when you go to the smaller towns and regional centres, they don’t have the employment diversity to reduce investment risk,” says Game. “By this I mean that a single industry in these locations can suffer, and real estate as a whole will suffer.”

Queensland’s mining industry has been one of the hardest hit in Australia, with the Queensland Resources Council stating that figures showed a total cut of over 2,000 jobs in Central Queensland between 2013 and 2015. BHP Billiton Mitsubishi Alliance and Hastings Deering mines in Blackwater both announced job cuts at the end of 2015, while once-thriving rural sectors such as Mackay are seeing the effects of the economic downturn with rapidly sliding real estate values. CoreLogic RP Data figures show house values are down 24% in the year to February, holding times on the market are lengthy at 157 days, and vendor discounts are high, at 24%.

Closer to the Brisbane epicentre, the region of Ipswich continues to thrive, bolstered by its own growing economy and proximity to the capital city. New surrounding developments, including master-planned community Providence in Ripley Valley, are drawing young families looking for appealing neighbourhoods close to city centres.

Down the southern corridor of Southeast Queensland, the Gold Coast keeps up its positive price growth and rising population, factors underpinned by its lifestyle and world-famous beaches.

While the recent escalation of development on the Gold Coast can be partially attributed to the impending Commonwealth Games, developers also seem to have more confidence in the market.

“Some substantial developments that have been on hold for years are now going ahead. The Coomera Town Centre is one of those,” says Game.

Beachside suburbs like Mermaid Beach, Burleigh Heads and Miami continue to grow in value, with buyers often opting to subdivide to take advantage of large blocks.

The spotlight is also being focused on the Gold Coast’s cheaper northern suburbs, such as Logan, Coomera and Ormeau, which are considered to be midway points between the two metro cities. These suburbs are undergoing enormous development, with the expectation that demand will ultimately grow as buyers are priced out of the Brisbane and Gold Coast markets in years to come.

In the Herron Todd White market report for February, analysts have identified Brisbane, the Gold Coast, the Sunshine Coast and Cairns as rising markets, while regional centres Bundaberg, Emerald, Mackay, Gladstone and Rockhampton are all approaching the bottom of the market.

“I don’t expect the market to go up massively, but I do expect it to be pretty solid,” says Game of the future of Brisbane properties. “I’d like to see about 6% growth each year for the next three to four years. That would be a great result.”

WESTERN AUSTRALIA

Bottom of the market could be cause for hope

A sudden surge in values this year, which heralded the first positive growth in two years, was a glimmer of hope for real estate punters

Perth homeowners and investors should be happy to hear suggestions from economists that Perth is possibly nearing the bottom of its market, a place it has been waiting to land since its economic slowdown in 2013.

The March CoreLogic RP Data Home Value Index reports the year-on-year loss at -1.95%, with the end of the first quarter 2016 seeing a slight upswing in house values of 1.3%. Units fell -0.24%.

Economists’ suggestions that Perth is nearing its lowest point beg the question: will it ever return to its former growth trajectory, or merely stabilise to corrected market values? Either way, the low prices are signalling bargain-buying time, particularly as the state is showing signs of finding its economic feet.

Recovery ahead

Perth buyer’s agent Liz Sterzel of Property Wizards explains that WA’s capital city is showing signs of recovery as the tourism industry gains momentum and oil and gas industries buoy the economy.

“Accordingly, we have seen a pick-up in enquiries as buyers begin to return to the market, hoping to take advantage of the wide range of choices on offer,” says Sterzel. “Perth has never experienced a 10-year period without house price growth, and with the expectation that prices are at or near bottom, and large numbers of housing stock available, there are opportunities for both new and seasoned investors.”

Unlike the historically well-performing markets that Sydney and Melbourne enjoy, Perth’s sliding values and negative sentiment keep many risk-averse investors at bay. Sterzel explains that in a real estate environment such as Perth’s, confident investors with vision for the long term are gearing towards add-value properties, and she reminds investors that time in the market is key to success.

“With careful understanding of their budget and potential cash flow, the savvy investor will be able to ride out these quieter market conditions and reap the rewards of the next upswing,” she says.

In February, the median of capital city dwellings was $599,000, around $16,000 less than 12 months prior. Strong performers included houses in East Perth and Burswood in Victoria Park, with 9.1% and 11.1% annual growth respectively, according to CoreLogic RP Data.

Regional areas have own strengths

While these premium suburbs with median values over $1m signal a strong market, buyers looking for similar strength without the astronomical price tag could consider regional cities in WA, which are a mixed bag of highs and lows but also stand on their own two feet in terms of potential and affordability.

Regional city Kalgoorlie’s suburb of South Boulder has proven historically strong, with an annual growth of 11.3%, while the port city of Albany remains solid at 10%, with a median of $720,000, CoreLogic RP Data reports.

Despite slipping dwelling values over the last quarter, coastal city and major seaport region Geraldton still has suburbs with good entry-level medians earning solid rental returns, says Phil Sorgiovanni, principal at Activewest Real Estate and branch chair for REIWA.

A prime example is Beachlands, which has enjoyed an annualised growth of 9.8% and averages a rental return of 4% for its $380,000 median. A surplus of stock is contributing to lengthier times on the market, giving buyers the luxury of choice and better value for their dollar.

“Sellers have become far more realistic and understanding of current market conditions, with many properties offering considerable value for those looking to buy,” says Sorgiovanni.

“If the residential market continues to stabilise from a price point, we should see some confidence return with buyers’ expectations on value and opportunity.”

At the top end of WA, local real estate agents say the beach resort town of Broome has a bright future despite its remote location.

“Broome has had consistent growth over the last 30 years and the future is no different,” says Raymond Kuceli, sales manager at First National Real Estate Broome. “With property prices and rental prices already settled and adjusted, it will see a steady growth from here on in.”

Shining brightest for investors is the average rental return of 6%, propped up by a high rate of renters in the greater Broome area, which ABS statistics peg at 56%.

“This is the best time for purchasing, as prices are the best they have been for many years, and the sales numbers are a sign that people see the value in our property,” adds Kuceli.

In the capital city, renters are smiling as competition pushes rents further into the red. In the year to February, house rents plummeted 8.3%, coming second-to- last behind Darwin; a significant drop considering Brisbane is third lowest with an annual change of just -0.7%.

SOUTH AUSTRALIA

Adelaide property a safe haven for investors

Quiet but reliable growth, good returns and ongoing demand have highlighted the capital of SA as an investor hotspot, while regional centres struggle under the weight of economic decline

Abuzz in South Australia is news of its ongoing tax reform, which will shoot SA from being the second-highest taxing state to the second-lowest, a move that could be a game changer in the economic performance of the state.

SA Treasurer Tom Koutsantonis applauds the reform, saying the restructuring of the tax system was necessary to protect jobs, in light of future threats to the state, which include:

• the slowdown of the Australian economy
• the withdrawal of federal government support for SA auto-manufacturing and navy shipbuilding industries
• federal government cuts to health and education

“By abolishing stamp duty on non-real and non-residential property transfers, we will remove a large barrier to business investment and expansion, encouraging economic growth and job creation,” says Koutsantonis.

Safety in numbers in Adelaide

Adelaide’s growth over the past year has raised its combined dwelling median price by $14,500 in the 12 months to February 2016, to a median of $464,160, CoreLogic RP Data reports.

Property consultant Michael Whitrow of Real Team Property Group says Adelaide is a kind of safe haven for property investing.

“[We have the] lowest mainland median prices, among the highest rental yields and steady tenant demand, helped by the large number of overseas students seeking accommodation convenient to one of Adelaide’s universities,” he says.

Demand is good, Whitrow states, evidenced by realtor feedback in the metro region that quality listings are in short supply. Metro vacancy rates have slipped 0.4% since February 2015 to 1.9%, says a March report by SQM Research. The report states that Adelaide rents have seen an overall increase in the past 12 months, by 0.4% for houses and a substantial 3.5% for units.

New developments in the works and CBD infill initiatives could impact on returns in the future. Urban regeneration initiative Renewal SA is in the master planning stages of a 17.1ha land release 2km south of the Adelaide CBD, which will become home to up to 1,000 dwellings in an innovatively designed community.

A government-driven densification policy in the metro area is also underway to combat Adelaide’s low population density, aiming to infill inner- and middle-ring suburbs in a bid to fill the gap in public transport expenses and revitalise retail and commercial life within the city.

“Medium density allows as many as six or more additional dwellings to be built where one stood before,” says Whitrow. “Two of the effects of this are that there are many more townhouses for investors to buy; the other is that established homes on larger allotments are becoming scarcer, and more expensive to buy.”

For high rental yields, Whitrow is currently looking towards the Playford and Onkaparinga LGAs, where investors are pocketing returns averaging 6–7%. “Adelaide’s western, southwestern and northern middle-ring suburbs show strong indications of future capital growth, albeit with lower yields,” he says.

A Herron Todd White report prepared for Westpac says the emergence of slight declines in some outer suburbs to the north and south of the CBD shouldn’t cause concern just yet.

“This is more likely to reflect a moderation of these markets following the previous peak, rather than a general downward trend in values,” the report states. “Despite some declines in value, Adelaide’s outer suburbs are benefiting from the development of infrastructure, including new shopping facilities and significant road works.”

“Collectively, these will help to support values in outer metropolitan locations over the longer term.”

Corrections in regional areas

The Iron Triangle – Whyalla, Port Augusta and Port Pirie – are in an ongoing correction phase following the slowdown in the resources sector, the report states. “Therefore, those considering buying a property within the Iron Triangle will need to consider the impact that the uncertain local employment market will have on the region’s real estate values in the short term.”

In Whyalla, Arrium steelworks’ desperate financial position has caused job uncertainty, while the impending closure of the Alinta coal mines and power stations will leave 450 workers jobless.

While regional cities are facing their challenges, many continue to provide high returns for investors. Whitrow says, “I’ve sourced many high-yield rentals around South Australia for clients who, to their surprise and delight, also enjoyed capital gain over time, in addition to strong cash flow through the period of their ownership.”

TASMANIA

$340k medians in the most in-demand capital city

Following a surprisingly strong 2015, Hobart’s market is enjoying some real estate conditions worthy of recognition in the first quarter of 2016

Hobart’s vacancy rates tightened by 0.4% from February 2015 to February 2016, SQM Research data shows, and it now takes top place for lowest capital city vacancy rates at 0.9%. In dwelling terms, that equates to just 239 vacant properties.

In an SQM Research March report, analysts concluded that “Hobart continues to record the most affordable rental accommodation with rents for houses at just $337 a week, while units on average rent for $286 a week”, a factor that’s underpinning its low vacancy levels.

But while rents may be cheap, they’re growing. Further SQM Research data shows weekly asking house rents are up 6.1% since the first quarter of 2015, and units rents have increased by 2.1% since the end of 2015.

Tightening vacancy rates will likely impact on rents further, says SQM Research managing director Louis Christopher. “Melbourne, Hobart and Canberra are all recording downward trends in vacancies now and this is resulting in upward pressure in rents for these three cities.”

These figures are reflected in Hobart’s rental yield growth, which is the second-highest capital city yield, at 4.1% growth for houses and 2.4% for units year-on-year to February 2016.

Hobart’s median dwelling prices have come a long way since 2011, when Tasmania’s capital was handed the undesirable award for worst-performing state in Australia.

CoreLogic RP Data’s market research report in February showed a $335,000 median for houses, which equates to a 6.1% rise in values over 12 months, and a median of $245,500 for units, or a

7.5% increase.

Looking ahead, opinions vary on Tasmania’s economic standing. Property growth is expected to be stable but modest, says a report by BIS Shrapnel. “Tasmania lacks strong industry drivers to generate strong employment growth,” the report states, adding that if excess stock remains on the market, price growth is “expected to be modest and likely underpinned by low interest rates”.

An opposing viewpoint came from the Deloitte Access Economics Business Outlook, which described Tasmania’s economy as “well and truly on the rise” – a sentiment echoed by Tasmanian Chamber of Commerce and Industry chief executive Michael Bailey, who said Tasmania’s major industries were gaining new life following the effects of Australia’s post-mining-boom slump.

The exceptions, he says, are the northern and north-eastern economies, which have been hard hit by the forestry industry downturn.

Josh Hart, director of One Agency Launceston, confirms that sentiment surrounding the property climate is positive. “[Hobart] is now known as a stable, safe and sought-after location due to its value for money compared to its counterparts,” says Hart, who agrees that Tasmania has turned a corner after its tough post-GFC years.

A potential boost to the state’s investor activity could come in the form of the Building Bill 2016, which will streamline the building and approval process. “[This will] encourage further residential and commercial development, reduce delays and increase additional costs,” says Hart. “We can only see this as a positive step that will encourage investors.”

Apart from its low median and solid yields, Hobart has a lot more to offer. Certain localities are finding well-priced properties are moving after the first open home, says Hart, who is also seeing strong competition in inner-city suburbs.

“With the Myer building now completed in the Hobart CBD, the University of Tasmania’s new accommodation and cultural and performance precinct, plus other commercial buildings progressing strongly, properties within close proximity to the CBD will be in demand throughout 2016,” Hart predicts.

CoreLogic RP Data statistics point to units in North Hobart and Battery Point as high-growth, gaining 25% and 23% in the year to February 2016 respectively. In Hobart CBD and Mount Stuart, houses have taken the lead with 23% gains.

Just 6km north of Hobart, the suburb of Moonah is undergoing significant transformation that is creating renewed confidence as it transforms from working-class suburb to trendy café and dining hub with a very attractive entry point. “When compared to North Hobart where a minimum entry point is $450,000 for a three-bed, one-bath home, a similar property can be purchased in Moonah for $300,000,” says Hart.

Launceston offers affordability, says Hart, location (a 45-minute flight from Melbourne) and highly regarded schools. And northwest of Launceston, Bernie has seen 11% growth over the past 12 months, according to CoreLogic RP Data, while major regional centre Devonport offers rental yields of 6% for its $240,000 median.

NORTHERN TERRITORY

Challenges ahead, but buyers still on top

For all its negative press, the NT could be preparing to play a handful of winning cards – and might even have a few aces up its sleeve for buyers

At first glance, the Top End’s recent real estate performance doesn’t inspire much confidence. The mixed bag of results shows falls in values across the board in the year to February 2016, CoreLogic RP Data reports, with the exception of 30 suburbs reporting positive growth.

While that already seems like enough bad news, the capital city’s next hurdle is its high vacancy rate, prompted by an influx of new supply and a population exodus.

Although the vacancy rate has tightened by 0.2% in the year to February 2016, to 3.6%, SQM Research managing director Louis Christopher notes that “despite this, both Darwin and Perth continue to record an alarming number of vacancies, particularly when you consider the number of vacancies recorded this time last year”.

By extension, it’s fair to say that it is investors who are feeling the pinch of the lowering rents and diminishing demand.

On the flip side, the first of Darwin’s aces is its rental yield, which is the highest in Australia at 5.2%, a CoreLogic RP Data report shows, and despite its economic difficulties it continues to have the lowest unemployment rate in the nation.

In addition, the April ANZ/Property Council Survey revealed that property confidence in the Northern Territory gained six points from the December quarter to March 2016, rising from 105 to 111.

When all factors are considered, including major government injections into infrastructure and construction projects, experts are seeing the upside of the falling prices.

The Property Council of Australia’s Ruth Palmer, director of the Northern Territory division, says that although the current weakened demand would cause some challenging times in the property sector over the short term, “the Top End’s long-term prospects across the entire property sector remain positive, so the real question is, how can investors take advantage of these weaker market conditions”.

“For investors who are willing to take a long-term approach, there will be a number of opportunities in the short to medium term,” she says.

The NT’s property market is certainly a buyer’s gold mine, as prices plummet and a high number of listings add to vendor motivation. CoreLogic RP Data confirms a 14.1% increase in properties on the market in the 12 months to February 2016.

AUSTRALIAN CAPITAL TERRITORY

Best city in world can tick off a few more accomplishments

Voted ‘Best City in the World’ by the OECD, Canberra is also earning itself some pretty high merits for its property performance

Healthy rental growth – the second-highest capital city growth, at 1.8%, in the year to

January 2016 – is just one indicator that Canberra’s tumultuous performance of recent years, largely due to government unrest and job cuts, may be settling down.

The bush capital has always stood separate from the Australian capital city crowd, which is driven by government movements and heavily reliant on the public service sector – and has been far from stable in recent years.

However, Canberra maintains high wages compared to the national average, and a consistently low unemployment rate, which the ABS Labour Force February Survey reveals is 4.9% and second only to the NT’s.

These factors have underpinned a stable but slow growth pattern for the Territory, achieving 1.7% all-dwelling growth in the year to March 2016, according to the CoreLogic RP Data Index.

Buyer confidence picks up

Penny Hyde, ACT and NSW licensed agent from Penny Hyde Buyer’s Agents, is seeing increasing confidence in the market after Canberra’s quiet growth over the past 12 months.

“Houses were the real winner, with some suburbs, such as Aranda and Weetangera, so far experiencing an addition of around $100,000 to median prices since last year,” says Hyde.

“The apartment market is the only sector that showed negative growth due to a strong component of new builds.”

Among the growth drivers are the side effects of the Mr Fluffy scheme, with many displaced homeowners seeking to stay in their own neighbourhoods, says Hyde. “Buyers are willing to pay premium prices just to achieve that goal.”

While Canberra has often been painted in a somewhat ‘ho-hum’ light, major urban redevelopments currently being planned by the ACT Government could add some much-needed colour to the city canvas, and attract a new wave of residents and boost the city’s tourism profile. The City and Gateway Urban Renewal Strategy aims to “transform and re-imagine the city” by creating a unique and vibrant district focusing on Canberra’s premier gateway, Northbourne Avenue, says ACT Planning.

With plans such as this in the pipeline, and further urban revival picking up pace in its inner suburbs, Canberra is slowly emerging with its own modern identity. Formerly industrial zones, the thriving Kingston Foreshore and Braddon’s hipster Lonsdale Street precinct, are now two of Canberra’s most sought-after locations.

Hyde says the revival of Braddon mirrors the edgy factor that can be experienced in Melbourne. “There are some amazing concept buildings going up in the area and tenants and people alike are flocking to the suburb.”

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