A strong start to the year for the ACT market
On Saturday 30 January, according to CoreLogic, Canberra recorded the highest capital city preliminary auction clearance rate nationally at 84.4%, ahead of Adelaide’s 83.7% and Melbourne at 83%. This was the first weekend of reported auction results for 2021.
Lack of quality stock has resulted in sales prices in many instances far exceeding reserves. Robust market conditions are providing vendors with opportunities to consider selling; however, some suitably ambitious vendors are choosing to continue their time in the market. Rising values are no doubt encouraging for those wishing to hold out for the price of their dreams.
Those who have recently started their buying journey face a steep education process, often resulting in considering what suitable compromises might look like. Lack of stock combined with enormous demand has supply and demand dynamics weighted heavily in favour of vendors.
In only a matter of weeks, price expectations change significantly regardless of the property type. Evidence of this can be found in CoreLogic’s Monthly Home Value Index reporting values for both houses and units in Canberra increased in January by 1.3% and 1% respectively. Houses now have a median value of $770,232 and units $477,196.
Canberra units generated an annual total return of 11.1%, which was the highest capital city result finishing ahead of Adelaide 10.2% and Darwin 9.8%.
Investor activity could continue to increase in 2021
An undersupply of apartments and townhouses has created a rental crisis. Domain’s December Rental Report confirms Canberra is the most expensive capital city to rent a house or a unit. Rising values and low borrowing costs are increasing the number of people with the capacity to invest. Interstate investors seeking to increase their exposure to Canberra’s economy have become noticeably active in the last eight weeks.
I anticipate buying activity from interstate and local investors will continue increasing throughout 2021, especially if the ACT Government continues maintaining negligible community transmission rates of COVID-19.
I believe 18-to-36-month timeframes to deliver off-plan projects are attractive for investors who exchange contracts to fix their purchase price and have the ability to participate in the market without the burden of holding costs. Those perceiving a decline in unit values upon expiry of the Federal Government’s HomeBuilder Scheme and holding off making their decision until then face the prospect of market conditions disappointing them.
Interstate investors used to lower rental yields and higher vacancy rates than Canberra offers have the capacity to be a catalyst for increased competition throughout the duration of 2021.
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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