2013 was an interesting year for the Canberra real estate market, with our property sector lagging some of the other capitals around the country which have entered a boom phase on the back of lower interest rates and investor demand. For the first time in many years in Canberra, heavy construction coming on line has led to challenges with oversupply – particularly in the apartment and townhouse market. This has led to flat price growth in most areas, and has also been impacted by the winding back of the First Home Owners Grant. This has increased from $7,000 to $12,500, but together with the stamp duty concession scheme, are now only available to purchasers of a brand new or substantially renovated property and also subject to greater means testing.
Job concerns in the Public Sector Executive ranks have also impacted property at the top end, with the Inner Canberra property market falling over the past 12 months.
But it’s affordability to the rescue! With interest rates remaining at cyclical lows and not expected to rise in the near future, homeowners have been encouraged to trade up to that second home and enquiry level in the $450,000-$650,000 section of the market is buoyant. Anecdotal evidence from the weekend just past where our first round of Auctions for the year were launched was good, with buyer numbers not seen since 2010, and some properties having over 50 open home attendees. If you are a homeowner in this price bracket who has been considering a move, this means that now may be the perfect opportunity to sell into a market that is generating good enquiry, and then take advantage of the depressed top end market to buy at a discount.
Similarly downsizers should be encouraged that they will face less competition from first home buyers at the lower end of the market, whilst maximising their own sale price.
For those looking to sell an apartment or townhouse, we believe you will be best served to face any potential hit now, rather than face a softening rental market and an uncertain 12-18 months of investor demand due to the specter of public service job cuts. For those with cash there are undoubtedly going to be good opportunities to add to your investment property portfolio now and over the next year provided you take a medium term view.