Seasonal low brought forward
During winter in Canberra, seasonally lower listing volumes occur. This is because Canberra homeowners have historically shown preference to sell their homes during the warmer months even though these periods have increased competition.
Seller activity has decreased significantly since government restrictions prevented public auctions and open homes. Even as we have seen restrictions relax, weekly new established listings on Allhomes have reduced by 40.12% since the week ending 27 March. This has effectively brought forward seasonally lower listing volumes by nine weeks.
On Saturday 6 June, Canberra recorded a preliminary auction clearance rate of 64%. Sales volume was exceptionally low, only nine properties sold on the day, collectively achieving a sales value of $8,400,000.
For those who are choosing to sell now, results are mixed. SQM Research found the number of properties advertised for less than 60 days had decreased month on month to May. Over the same period, the number of properties advertised for 60-180+ days increased. This indicates there is buyer demand, however it’s price sensitive, leaving ambitious sellers stranded and isolated from the market.
Incentives to buy pique buyer’s interest
From 4 June 2020 until 30 June 2021, eventual owner occupiers have significant incentives to consider purchasing new properties. The ACT Government has offered to waive stamp duty for eventual owner occupiers purchasing new single residential blocks of land. Owner occupiers buying off-plan apartments and townhouses with a purchase price up to $500,000 will also have their stamp duty waived or reduced by $11,400 for purchases between $500,001-$750,000.
The Federal Government also announced an incentive to buy new. Their $25,000 HomeBuilder Grant will apply to people building or renovating their homes, providing they meet strict conditions including means testing, personal contribution of funds for renovations, pre and end valuation of property and construction contract, and commencement within three months of contract date.
Since the announcement of these incentives, I have been inundated with buyer enquiries; buyers who had intended to buy anyway but now feel some urgency to make their decision and those seeking to buy as the incentives will help them. Those suddenly seeking to buy are often unaware they need to have either a 5% cash deposit or a deposit bond of 10% to exchange contracts. Therefore, offering $25,000 solely to those meeting the current means testing is ineffective.
In my opinion, both federal and ACT government incentives miss the mark in their application. On the basis they were put in place to stimulate the construction industry and keep construction workers employed, stamp duty concessions and HomeBuilder Grants should be applied for those buying investment properties and higher income earners. People in these demographics are more likely to have access to either the cash or equity required to be in the position to exchange contracts on a purchase or new build.
Lack of stock in the established market means those thinking of selling should consider their timing, as there is minimal competition right now. The grants and stamp duty reductions are a great gift from the government for those who qualify. A broader application of the incentives from both the ACT and federal governments could increase market demand significantly, which in turn would keep more construction workers employed.
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