Market Wrap - August 2015
31 August 2015 Symon Badenoch
In a recent article in The Canberra Times it was reported that across Canberra there is in excess of 15,000 apartments in the pipeline in the hands of developers, being released or just developed.
So what does this mean for property investors in the ACT? In the short term it will create an oversupply of apartments putting downward pressure on apartment rental and sale prices.
However, the long term outlook (5-7 years) is more positive. The ABS recently released the average wages for Australian and the Canberra average is significantly higher than the overall Australian average. This coupled with our low unemployment rate should see more people move to Canberra in the coming years. If this occurs we will see an increase in demand for apartments which in turn will increase the rental yields and capital growth of apartments.
In the meantime, property investors are spreading the risk and looking to purchase houses with decent land value. This might produce a lower rental yield but a higher chance of long term capital growth.
For those who are unaware, The ACT Government prefers all new suburbs to be medium destiny housing (I.e blocks on average of 450m2) so the older established suburbs with block sizes of 800m2 plus will become more attractive to buyers wanting more space.
For example- Last weekend in the brand new suburb of Coombs – 501m2 blocks were SOLD for $450,000! Working on building costs of $350,000 for a standard building – that means a total cost of $800,000 for house and land! This why I feel the older suburbs are worth serious consideration.
If you wish to discuss the current market or any of the above. Feel free to give our team a call.