Canberra’s property stability is proving a major strength but most investors are unlikely to take notice – and that’s the city’s tragedy
Much to the chagrin of people who live there, Canberra has developed something of a reputation as a place where, apart from politics, nothing much good or bad happens.
True or not, it’s a sentiment that has found its way into the property market. Prices show that Canberra is the wallflower of Australia’s capital city markets: property values neither plummet or skyrocket, they simply coast along. In good times and bad, Canberra property never makes the headlines.
This is the city’s major tragedy. A quick look at ACT property stats tells us why. Australia’s capital is home to just 360,000 people and is a smaller market than a lot of the major suburbs in bigger cities. The Gold Coast’s Surfers Paradise alone had more unit sales than the whole of the Australian Capital Territory in 2012.
Despite its size, the market is robust. Over 2011, Canberra showed the highest value growth among all capital cities. The official figure was only roughly 0.5% growth, according to Residex, but this was as every other capital city sank backwards. Brisbane , Adelaide and Perth house and unit prices, by comparison, each fell by around 5%.
2012 was a similar story for Canberra. The best performer among capital cities was Darwin houses (8.1%), but apart from that the only other capital cities that saw growth (Sydney and Perth) recorded figures less than 1%. Canberra growth was at 0%. Meanwhile, Australia’s four remaining capital cities all shrank back in median property values.
“Canberra is a very dense housing market,” says APM senior economist Andrew Wilson. “It doesn’t have a real top or bottom end and doesn’t have the same fluctuations that you see in other cities.”
Wilson says that what keeps the Canberra property market ticking is higher-than-average incomes and an ongoing shortage of land. “It does have a shortage of accommodation and there are constraints to the release of new land because of the cost of infrastructure development, among other things,” he says.
Wilson adds that the release of land is further slowed by mechanisms such as ballots, which contribute to the ongoing land shortage. Demand from first homebuyers tends to be good too, keeping the market active. It’s the age-old equation of supply and demand and this is what has kept the Canberra market resilient.
Unemployment and population figures also bode well for the ACT. Estimates by the ABS have the city unemployment rate at 3.9%, among the lowest in the country, while population growth has been above the Australian average at 1.9%.