As demand increases, buyers pay the price for delayed decisions
During October, Canberra experienced an 8.4% increase in the number of new listings. This is consistent with the spring selling season which typically sees listing activity increase. Interestingly, whilst there was an increase in the number of listings advertised for under 60 days, there was a drop in the number of listings advertised for more than 60 days. This indicates robust buyer demand is making an impact, reducing days on market. Even though there was a spike in listing activity during October, yearly listing activity remains down 8%.
Preliminary auction clearance rates illustrate how quickly market conditions are accelerating. On Saturday 14 November, Domain reported Canberra achieved 91% preliminary auction clearance rate, up 22% on the same time last year.
According to the Australian Bureau of Statistics, ACT residents have the highest ordinary weekly earnings nationally. Each time the Reserve Bank of Australia acted to drive down borrowing costs, it enabled borrowers to access higher levels of credit without increasing their repayments, therefore maintaining affordability. The benefits of lower interest rates are exponentially greater when residents have higher incomes. This is all prior to accounting for confidence of maintaining employment indicated by the unemployment rate snapping back to 3.9% and potentially higher levels of household savings due to restrictions around travel.
These conditions are fantastic for those who own property but can be frustrating for people wanting to buy. Those who put off buying earlier this year are noticing property values are increasing at a pace difficult to keep up with, resulting in compromise to enter the market. Acting decisively in April would have secured a three-bedroom townhouse, however, they are now finding for the same money only two bedrooms. It is an unfortunate illustration of why the best time to make a buying decision is as soon you can afford to.
Canberra market defies expectations, values forecast to increase
2020 has seen property forecasters have a horrible year, especially in their assessments of Canberra. Our property market defied their expectations and has seen across the board adjustments of 2021 forecasts in anticipation of values increasing.
ANZ have forecast 8% growth which would see nominal improvement in market conditions which delivered 1.9% growth during the three months to October reported by CoreLogic. To put this in perspective, CoreLogic reported the median property value in Canberra for October as $656,739. Should the market forecast by ANZ be realised, Canberra’s median property value would increase by over $50,000 during 2021 or by far more than most people could save over the same period.
Off-plan property provides those who aren’t ready to settle straight away the ability to secure the purchase price now and wait for construction to complete prior to settling. Stamp duty concessions, discounts and the $25,000 HomeBuilder Grant provide plenty of incentive to consider this part of the market. Regardless of your purchasing criteria, it is evident delaying decisions will likely result in paying more for the same type of property later.
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.
Find property listings at Canberra Weekly Real Estate.