Market conditions are a compelling proposition for potential vendors. Prospective buyers are competing for fewer opportunities, using their ability to access low cost debt to pay reasonably strong prices across all parts of the market. Domain’s weekly auction results show the last weekend Canberra’s auction clearance rate fell below 70% was 11 July. Since then, the auction clearance has reached or exceeded 80% on four occasions.
Quantifying supply of stock, SQM Research found there was a 6.3% month-on-month drop in the number of properties for sale in Canberra during August. Year-on-year, the number of properties for sale fell from 4,399 to 3,902, or by 11.3%. Auction results show buyer demand has not proportionally adjusted, leading to increased competition and property values.
CoreLogic’s Monthly Home Value Index found property values in Canberra have increased 6.9% during the last year for a total return of 12%. Over the last six months, Canberra has asserted itself as the strongest property market nationally, trailing only Sydney in annual growth and total return. An extended lockdown in Melbourne has increased the likelihood of Canberra’s median property value overtaking Melbourne.
An interesting data point in CoreLogic’s Monthly Home Value Index is similar growth rates for both house and unit values in August. During the previous quarter, house values increased by 1.3% and units 1%.
In the off-plan market, surprisingly, there has not been a rush of new projects accelerated to market by developers seeking to take advantage of favourable pre-sale conditions. Throughout September and into early October is the ideal launch window for new projects to have sufficient time to achieve pre-sales prior to Christmas. This means it is highly likely we will see an increase in the number of new projects launching over the coming weeks.
Since May, I have noticed a sense of urgency from buyers has been building momentum across the off-plan market. Sentiment was already improving prior to the announcement of Federal and ACT Government incentives to purchase new dwellings, however, sentiment exponentially increased upon their announcement. For the last few years, buyers have been able to delay decisions without consequence, however, a lack of medium-density stock and apartment projects with clear points of difference are driving high volumes of enquiry. Last week, 34 groups of buyers secured new apartments and townhouses across the portfolio of projects I work on, exemplifying current conditions.
In Canberra, behaviour does not correlate with the impending ‘fiscal cliff’ economists speak of. The strong economic composition of Canberra has historically shown property values have had incredibly high resilience to adverse market forces. Over time, the terminology ‘fiscal cliff’ or forecasting property values falling by 30% may be remembered as having an equally inconsequential impact on reality as the Y2K Bug.
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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