As the Australian property market slowdown continues, with pronounced declines in Sydney and Melbourne, Canberra is boasting some of the country’s strongest market conditions, with an annual increase in house values of 2.4% overall.
According to CoreLogic’s Hedonic Home Value Index for June 2019, Canberra’s rental market was one of the strongest in the country. Average rental yields across the ACT sat at 4.9% as of May 2019, a 0.2% improvement on the same period last year.
Likewise, over the three months to May 2019, housing values had picked up by 0.2%, making it the strongest-performing capital city in Australia for the quarter.
Will ACT property market growth continue?
Domain’s Property Price Forecast report for June 2019 predicts that the nation’s capital will finish the year with house price growth of 2%. This is in contrast with the first quarter of 2019, when Canberra’s median house price fell by 2%.
Canberra is also expected to be one of the strongest performing markets in 2020, with growth in house prices of between 4% and 6%. Sydney and Brisbane are the only other capital cities expected to have a similar level of growth, at 3% to 5%.
The report predicts that price growth will be underpinned by strong population growth and low unemployment in the capital. However, it’s expected that ongoing high levels of new apartment building will keep unit prices from rising (unit, apartment and townhouse approvals in Canberra have risen 30% in the past year). As in other states, investor borrowing is expected to increase modestly towards the end of 2019 after falling for the past 18 months.
The election of a Labor government usually pushes up Canberra property prices due to the expectation of more public sector jobs. But Labor’s proposed tax changes were expected to push prices down, so the Coalition’s shock win should give Canberra property more of a boost.
What’s impacting property market conditions?
Tim Lawless, CoreLogic’s Head of Research, said in a statement that the outcome of the federal election, along with a number of other regulatory changes, are likely to have a positive effect on housing market conditions in the ACT and around the country.
“The federal election outcome has removed the uncertainty surrounding taxation reform which should see an improved level of confidence amongst home owners and prospective buyers, particularly investors,” he said.
“We now have some certainty around the initiatives announced in the federal budget, a consistent commission structure for mortgage brokers (who comprise around 60% of mortgage originations), and the eventual stimulus for first home buyers in the form of a federal government deposit guarantee, which although limited to 10,000 participants with at least a 5% deposit, will kick off in January next year.”
The ACT’s stamp duty changes set to be enacted on 1 July 2019 should also provide a more favourable environment for first homebuyers and help boost confidence in the market. The change will see stamp duty waived for first home buyers if:
The total gross income of all home buyers and their domestic partners (if any) for the previous financial year is below $160,000. No buyer of the home has owned any other property in the last two years. At least one owner lives in the home continuously for at least one year, starting within 12 months of settlement or completion of construction.
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