Can the ACT’s property market continue momentum?
The Federal Government has announced scrapping responsible lending laws allowing lenders to simplify approval processes. This decision places the onus back on borrowers to provide accurate information rather than on banks to forensically investigate an applicant’s living expenses. Improving access to credit could play a large role in freeing up the market in Canberra, which is currently constrained by lack of stock.
For the last few months, Canberra’s auction market has been extremely robust generating the highest capital city clearance rate for many weeks. Domain reported an 85% preliminary clearance rate on Saturday 26 September indicating an overwhelming majority of properties taken to auction are sold under the hammer or prior to auction. Many properties not selling at auction are sold within days post auction, demonstrated by the stream of smiling vendors, buyers and agents putting sold stickers on signboards.
Over the next few months, as access to credit improves, I anticipate a high proportion of people will start to consider upgrading. Those who have not reviewed their mortgage for 12 or more months may be surprised to see they could potentially increase their loan by a couple of hundred thousand dollars without significantly increasing their repayment. Over the last decade, relentlessly consistent market conditions have broadly increased property values across Canberra, meaning some people will find they are in a significantly superior equity position to where they may have initially thought.
Market conditions have aligned to provide significant advantage to those considering moving into a larger home. People upgrading their homes often sell the one they currently live in, potentially increasing the number of listings on the market and opportunities for first home buyers.
In an already competitive environment delivering exceptionally strong results across all price points, can the property market in Canberra continue momentum after months of strong auction clearance rates?
Yes, and easily. Canberra’s market has behaved as expected for all but a few weeks. Lenders arming borrowers with increased debt via a simplified application process without necessarily increasing their repayments to service the debt could provide a gentle stoking of the market to wean off some of the stimulus finishing late this year. Canberra has higher housing affordability than nearly all other capital cities providing lower risks of the market heating up too much.
This creates potential in the off-plan market too. Astute buyers of off-plan properties may be able to secure a $25,000 HomeBuilder Grant and ACT Government stamp duty concession or discount plus end up settling in an environment where lenders are improving access to credit. Across the market broadly, current conditions are creating plenty of positive sentiment.
With Sam Dodimead, local property professional and host of Canberra Property Podcast where you can get to know the consultants contributing toward deliver of new buildings. Stream from wherever you listen to podcasts.
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