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For many years the word Canberra has been followed by a yawn, then associated with bureaucracy and stuffy politicians. However, those times, they are a changing! Would you believe Lonely Planet rated Canberra the third best global city to visit in 2018? The unemployment rate is the lowest in the country and the average weekly wage the highest? We also can’t bypass the hipster baristas, always a sure sign of a gentrifying area.
Quick facts for the time poor :)
- In 2017 the average price of property increased 8.4% for houses and 0.4% for units
- Greater Canberra vacancy rates are 1.3% and as tight as 1% in some regions, meaning there is incredibly strong demand for rental properties (as at February 2018)
- On average the rent increased by 8% for house and 2.4% for units in 2017
- Houses are currently returning a median gross rental yield of 4.2% and units 5.4%
- Ranking highest for economic growth amongst all capital cities in the 2016/2017 financial year
- In the third spot on the recent CommSec state of the state report behind NSW and Victoria
- Strong projected population growth of 29.9% by 2041
- Canberrians are paid the highest gross average weekly wage in Australia at $1,774.10
- And the majority of them are gainfully employed, with Australia’s lowest unemployment rate at 3.7% (December 2017).
For the time rich reader ;)
More visitors are coming, with international traveller numbers up 10.2% and local holidaymakers up 12.6%. This has been aided by the new international airport terminal that opened in September 2016. Singapore Airlines will be flying daily from Canberra to Changi (via Sydney) and Qatar Airways will operate a daily flight to the Middle East and 23 European cities (via Sydney) from this month (February 2018). And why wouldn’t the tourists want to come - Lonely Planet named our nation's capital the third best global city to visit in 2018. Home to many amazing museums, galleries, hatted restaurants and a burgeoning food scene with Braddon, Kingston, Turner and Manuka full of great restaurants, bars and cafes. The Canberra casino has a $300M proposal on the table to redevelop the existing site, including six-star villa accommodation, a five-star hotel, seven new restaurants, a nightclub, bars and luxury brand shopping mall.
The Canberra City Plan:
There’s no denying the CBD (or Civic as the locals refer to it) is in need of a nip and tuck. The ACT government has set the framework in place to transform the CBD by 2031. In August 2017 Malcolm Snow was appointed CEO of the City Renewal Authority. Positioned as one of Australia’s leading place makers with past roles as CEO of the National Capital Authority, Head of Design with the city of Melbourne, Director of International Consulting with Urbis and CEO of the South Bank Corporation in Brisbane. Modelled on the transformation of the Melbourne CBD in the 90’s the plan sets out to make the city centre a vibrant day and night hub mixing residential and corporate communities.
The city and surrounds are a construction zone at the moment! Stage one of the 12km light rail track is in full swing, connecting the CBD with the outer suburbs to the North. A plethora of commercial, residential and hotel developments are popping up in the CBD and suburbs. And to cater for the population growth new hospitals, revitalisation of community hubs, local shopping centres and new housing precincts.
The ACT economy is in a strong position, having recorded the highest YoY annual growth of any capital city at 4.6% in the 2016/17 financial year and ranking third in the most recent CommSec state of the states report. Largely, driven by the federal government, although in the last financial year public administration made no contribution to the growth. What we have seen is a rise in the professional services sector (which is to be expected given federal budget cuts typically see the money funnelled back into the private sector), health care and education.
The strong economy brings with it the award for the nations lowest unemployment rate at 3.7% (as at December 2017) and the highest weekly gross income at $1,774.10 (as at May 2017) an increase of 1.8% over the previous 6 months. According to the latest Census, the capital’s population has increased by 1.8%, the second highest in Australia behind Victoria.
As per the above, the public service is still by far the largest employer in the ACT at 26%, followed by healthcare and professional services at 10.8% and 10.3% respectively. To note, over the past 20 years (June 1997 - June 2017) the public service sector has increased marginally by about 0.5%, with healthcare being the largest growing sector by 4% followed by professional services at 3%. With education and construction around 6% and all other services between 0.1% and 5%.
With suitable properties for budgets of all shapes and sizes, you can purchase stately homes in Yarralumla with a median price of $1,400,000 to modest family homes in the Belconnen region for $560,500. Canberra is forecasting well with all major economists, predicting 2018 growth rates of 5 - 9% and rental prices increases of 3 - 6%. Canberra is in a strong housing market phase with strong market conditions. Changes in federal government budgets need to be closely monitored as any sharp downturns would have an impact on the housing market.
The number of houses advertised for sale has increased by 4.6% in the 12 months from December 2016 to December 2017. Construction numbers have also slowed with 22.1% fewer detached houses being approved for construction in 2017 compared to 2016 and 30.1% fewer apartments. The Mr Fluffy scheme saw 1,023 properties affected with asbestos and earmarked for demolition, to date 916 homes have been demolished. The number of new home loans for owner-occupiers has increased 26.9% from November 2016 - November 2017. Although there has been a small increase in properties advertised for sale, this data points to the fact that housing numbers are low and demand is increasing.
If you're visiting Canberra spend some time driving the streets and discover the stunning new and old architecture. As the city was planned, there is a clear distinction between the suburbs that housed the well to do, the public servants and the labourers. The inner ring suburbs are a mix of new architecturally designed homes, alongside mid-century properties designed by some of Australia's most prominent architects. The outer suburbs are home to the famous Canberra ex-govies! A series of roughly 16 designs that were built to house government workers.
On The Ground:
The city and surrounding regions are a buzz of activity, open houses are busy, once government housing areas are showing signs of gentrification and good rental properties are in high demand. We are big advocates of the Canberra detached housing market, in gentrifying areas that allow for cosmetic and structural renovations. We have concerns about a large number of units being constructed and the fear of an oversupply, which is highlighted by the slower capital growth. Although, with incredibly strong yields due to the transient nature and high wages of the professional services sector, they still offer great value for positively geared strategies.
Know how the Canberra leasehold system works? Get up to speed here.
Milk Chocolate was founded seven years ago by Richie Ragel and Michael Cleary, to purchase residential and commercial property in Australia on behalf of our clients, looking for a home or investment property. To see how we can help you get in touch here.
Sources: ANZ Bank, Capital City Forecasts/Australian Bureau of Statistics (ABS)/BIS Oxford Economics/CoreLogic/SQM Research/Property Value/SGS Economics & Planning/ACT Government, Department of Treasury and Economic Development/CommSec, State of the States (analysis eight key economic indicators for each capital)/Domain/Herron Todd White/Visit Canberra
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