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07-06-2008 - CANBERRA PROPERTY REPORT - May 2008 |
Canberra:
More land, fewer public servants: the market is expected to slow a little
Last time we told you Canberra had been nominated the "fastest market in the land". According to RP Data, the nation's fastest market among the capital cities was the Canberra apartment market, with properties typically selling within 17 days. APM gave Canberra another title: the most heated of Australian property markets.
Well, all that is likely to change. The omens suggest Canberra will come back to the pack this year.
RP Data says it's already starting to decelerate. The RP Data Property Pulse report says: "Canberra's short run of price growth slowed down over the last quarter of 2007. Houses and unit prices in Canberra increased 13.9% over the year but with only a 1.5% movement over the quarter."
The Australian Property Outlook report from ANZ says the ACT has been an exceptional economic performer recently, given that it's a non-resource region. "However, more recent data suggests the economy is coming off the boil, with state final demand experiencing its largest quarterly contraction in over 10 years, falling 1.9% in the September quarter. Employment growth has also stalled with the number of employed reduced by 0.5% in the year to November."
Among Canberra's problems are the cuts to the public sector planned by the Rudd Government. Another key change is the release of large of land for new residential development (land shortages have been blamed for rapid price growth recently). And, in the past year, the ACT has had the lowest economic growth and lowest employment growth among the states and territories.
Valuer Herron Todd White also sees contraction in the Canberra market. "Buyers are showing more caution and this has caused a general slowdown in sales, with marketing periods for selling properties on the increase," it says, adding that there is also a steady rise of supply of new properties on the market, including new land releases around the city.
But that's not to say Canberra won't continue to provide growth. Prices are high in Canberra but so are incomes and affordability remains at manageable levels. "Repayments on the average mortgage are only 25% of disposable income in Canberra, much lower than the national average of 37%," the ANZ says. "This may give prices some further upside in the coming quarter."
House rents have risen an average 9% a year over the past three years and apartment rents by 13.5% a year, according to RP Data figures. So there's been healthy rental growth and that, plus the heat coming out of the demand side of the equation, suggests growth will be less in the next little while.
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This article was written by Terry Ryder and is an extract from The Property Report - May 2008 taken from the Report page of the website http://www.jenman.com.au. Terry Ryder is the creator of the website http://www.hotspotting.com.au. We highly recommend both these websites for people interested in real estate.
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