Canberra to see growth in all sectors except unit market in 2020: HTW residential

Population growth is over two percent year- on-year, investment in infrastructure including development of the Northbourne Avenue corridor, the Canberra Hospital expansion, a new Canberra Theatre and the successful introduction of Stage 1 of the light rail system (with plans in place for Stages 2 to 4) seem to be attracting more people to the Bush Capital, according to the Herron Todd White (HTW) residential report. 

"So what does this mean for the Canberra housing market? Well, let’s look back before we look forward. 2019 brought us the long awaited conclusion to the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry, record low interest rates as well as a general election and the media frenzy regarding the Sydney and Melbourne housing markets.

"Any one of these events could have significantly affected the Canberra market but what actually happened? Not a lot! Houses still sold and most real estate agents have had a very good year, thank you very much," the valuation firm said. 

In fact, records were broken w ith 30 Mugga Way, Red Hill (pictured below), selling for $5.85 million at the tail end of the year.

Sitting on a 5,110sqm allotment, the home comprises five bedrooms, formal lounge and dining, study, and established front garden.

Other highlight include swimming pool, tennis court, wine cellar for 460 bottles and three car garage.

"So what of 2020? From my Year 7 economics lessons, I recollect the effects of supply and demand on any market and it is no different in the Canberra housing market. There is a predicted rise in population (for the reasons stated above) and these people will all need somewhere to protect them from the Canberra elements (freezing winter conditions and searing summer heat)," the valuation firm stated. 

"So demand is there but what about supply? Sales of Mr Fluffy blocks have slowed considerably with the general consensus being that you can get better value elsewhere," the valuation firm continued. 

New land releases in Wright, Coombs, Denman Prospect, Throsby, Taylor and Strathnairn have seen steady sales with additional land releases in Whitlam set for March 2020.

The report notes these should keep the building contractors in Canberra busy over the coming year and possibly see a rise in already high construction costs.

Supply of units is a slightly different story although it is influenced by locality, according to the HTW report. 

Units in areas such as Gungahlin (approximately 14 kilometres from Civic), have seen values drop slightly due to rapid development, with an influx of units coming onto the market and reduced demand (back to Year 7 economics).

A one bedroom apartment in Gungahlin (pictured below) is currently on the market with $295,000 hopes. 

The apartment at 116/1 Anthony Rolfe Avenue comprises living area, designer kitchen and one bedroom.

The complex features 25m swimming pool, gym and barbecue area. 

"Elsewhere, the value of units is expected to be steady although it will be interesting to see the effect of the recent media attention given to poorly designed or built units in Sydney and Melbourne and whether this will see potential purchasers turning their attention from buying off plan to looking at older more established blocks.

"However, it’s not all bad news for owners of units as rental income is high and vacancy rates are low and there is no reason to believe this will change over the coming year," the valuation firm said. 

Housing in established suburbs is still expected to be in demand with property selling well, particularly in the popular inner south and inner north.

The report suggests Ainslie and Yarralumla are leading the field with regards to median house prices which are well over $1 million.

At the other end of the scale, areas further away from Civic have a lower median house price such as Belconnen ($375,000), Charnwood ($458,000), Banks ($488,500) and Phillip ($490,000).