National Property Report – July 2016


 Sydney’s unit market may be showing signs of recovery

 While the trend of falling prices observed in the December quarter has continued, units in Sydney are showing signs of growth

 Sydney’s real estate scene for 2016 looks promising. As per the Knight Frank Residential Property Index released last April 13, the most expensive homes in this region saw a 14.8% increase in value over the past year. In fact, Sydney is expected to be the top performer in the Australian real estate market.

Nerida Conisbee, chief economist of REA Group, indicates that as the economic performance of New South Wales and Victoria surpasses that of the other states, particularly the mining states of Western Australia and Queensland, housing demand in these achieving regions improves along with population growth.

“Sydney has made huge headway in improving major infrastructure projects over the past three years and this has led to a lot of positive economic impacts,” she says. “Sydney and Melbourne continue to outpace house prices to the rest of Australia, consistent with economic growth in both those cities. Our larger capital cities continue to see growth and this is likely to continue.”

Indeed, houses in suburbs such as Gooloogong, Wombarra and Tarrawanna have experienced significant growth over the past 12 months. For Tarrawanna, this continues a consistent growth trend that has been observed over the past five years. By contrast, Gooloogong had no recorded growth for the past few years, but it has burst onto the scene as the New South Wales suburb with the most significant price increase, according to CoreLogic RP data.

The performance of units has been particularly remarkable in Waverley, which saw strong growth over the past five years from 72% to 35% and back up to 48%. The unit market in Ultimo has also been doing well. Conisbee confirmed that most building approvals in Sydney at present are for apartment development – as a result, the amount of stock increases. “The supply of apartments in Sydney continues to grow,” she said. “Land shortages here, particularly in the inner areas, are more pronounced.”

“While Sydney lags Melbourne and Perth in terms of housing development, it is seeing the highest level of apartment approvals of all our cities. Apartments are popular, not just in the inner urban areas, but also in the middle and outer ring suburbs. There has been a distinct structural shift in apartment living in Australia, however, the impact is still most pronounced in Sydney.”

Despite the increases in both house and unit prices (6.9% and 5.8%, respectively), Domain Group’s chief economist Dr Andrew Wilson takes a different view of Sydney’s property market. “It’s a bit of a mixed market,” he stated, noting that Sydney experienced one of its sharpest declines since 1993.

“It’s really the inner suburban, high-priced areas that are holding the market up. There’s been very strong growth in the lower north over the quarter, and if it wasn’t for that, we would have had a sharp decline in prices.”

In the Domain House Price Report compiled for the March 2016 quarter, he pointed out that the capital’s median house price fell below $1m, whereas unit prices dropped to just over $650,000.

These price dips continue a trend that was observed back in December, although the decrease is less severe than it was last quarter.

“We can expect subdued conditions to continue over the remainder of the year, with any price growth unlikely before spring,” Wilson says. He also notes that he expects prices to flatten out, an advantage for first time homebuyers, and growth to hover around 5%.

Eliza Owen, market analyst for, also pointed out in a recent market update that the growth experienced by the house market in Sydney dropped slightly over the last quarter by 2.17%, whereas the unit market increased a bit by 0.81%. Rent rates for units have also jumped over the past year, unlike those for houses. Indeed, SQM Research data suggests that as of April 16, the rental yield for units is considerably higher than that for houses. Owen highlighted the findings of research conducted by the University of New South Wales’ City Futures Research Centre, which implied that the presence of vacant homes throughout Sydney may have contributed to high prices while limiting supply. Many of these properties are found in inner-city suburbs that report low rental yields. This may be indicative of the desire of investors to take advantage of negative gearing in order to avail of significant tax concessions from capital gains.

Nevertheless, Sydney’s performance, good or bad, appears to influence the state of other capitals. “It could be that as property becomes more out of reach during upswings in Sydney, investors spill over into the more affordable markets nearby,” Owen says.



 Melbourne unit market exhibits strong growth but at what cost?

 More and more units are being constructed, but will it be a smart move in the long term?

In 2015, Melbourne’s property market experienced its “third consecutive good growth year”, and 2016 appears to be maintaining this trend, according to a report published by Propertyology.

“Victoria’s economy at the moment is strong as evidenced by its AAA credit rating,” says Simon Pressley, managing director of Propertyology, in the report. “In the 2014 and 2015 calendar years, a remarkable 194,000 extra jobs were created in Greater-Melbourne. No wonder its property market has been strong.”

Pressley mainly ascribes this boom in job opportunities to the thriving industries of tourism, professional services related to finance and insurance, education, and construction.

Moreover, “New South Wales and Victoria are pulling away from the rest of the states as the reversal of the two-speed economy becomes more apparent,” comments Nerida Conisbee, chief economist at REA Group. As a result of the significant economic growth, house prices in Melbourne surpass those in most of the other Australian regions. This has driven the increased housing demand in Victoria since 2010.

“Melbourne’s employment opportunities have coincided with a downturn in Western Australia’s (iron ore) economy, resulting in a rebound in interstate migration since 2012,” he notes. Pressley also highlights a trend in the construction of more apartments. “Attached dwellings represent 56% of all building approvals over the last four years, up from the 35% 10-year average. Melbourne City is on track to approving 19,000 CBD apartments over the last three years … an increase of 158% on the annual average from the previous five years.”

CoreLogic RP Data statistics reflect this trend. Units in suburbs such as Kalorama are shown to be in greater demand than houses with respect to the demand-supply ratio. Moreover, auction clearance rates for units exceed 70%, in contrast to the significantly low rates for houses. “The best yields available are for one-bedroom apartments in Melbourne,” says Conisbee. “In particular, the suburbs of Bentleigh, Altona and Box Hill are all experiencing rental yields in excess of 9.5%.”

The unit markets in Port Arlington and Ocean Grove also grew over 30% in the past 12 months, while maintaining positive quarterly growth. “Ocean Grove gets a lot of holidaymakers from Melbourne and Sydney as well as different types of retirees,” says Lee Botsios, senior associate at Fletchers Bellarine.

The vacancy rate is also a low 1.3%, indicating the suburb’s appeal. Nonetheless, “buyers from the city prefer homes in old Ocean Grove built on 4,000sqm to one-acre blocks of land,” Botsios notes. This suggests houses continue to sell very well. In Melbourne, growth in houses over the past year was 8.2%, compared to growth in units of 4.3%.

“Glen Waverley is currently doing particularly well for apartments,” Conisbee adds. “This is being driven by the addition of more high-quality stock to the area, but also strong demand from Chinese investors.”

The rosy view of Melbourne’s property market is reiterated in the Domain House Price Report published by Domain chief economist Andrew Wilson. Melbourne was highlighted as “the only mainland capital to buck the trend of falling house prices” all over Australia. The city showed a house price hike of 1.2% in the March quarter, although unit prices dropped by 1.7% in the same timeframe. Moreover, over the 12-month period that ended that month, Melbourne had the highest house price increase of all Australian capitals.

“Melbourne has now overtaken Sydney as the fastest growing capital city housing market in Australia,” Wilson states. “Melbourne has recorded 14 consecutive quarters of house price growth, the longest sequence since June 2008. It’s a quietly confident market, very even in terms of price range.” But price growth is not likely to exceed 5%.

However, while Propertyology experts have said Melbourne could be among the top performers this year, they do not recommend investing here. Pressley notes that “the housing supply pipeline exceeds population demand in Melbourne to the tune of approximately 12,000 dwellings per year”. The increase in unit construction could result in considerable oversupply.

“Of even bigger concern is the impact on as much as 6% of the city’s households from car manufacturing plant closures from late-2016 and continuing through 2017,” he adds. This is expected to shake the confidence of both consumers and businesses, aggravating the discrepancy between housing demand and supply further. Thus, this capital’s outlook over the next couple of years is “bleak”.



 Houses are the stars of the Brisbane property market

 Even though house prices in Brisbane saw a decline during the March quarter, the housing market continues to be a much better option than units in this capital city

 Brisbane appears to be joining the list of Australian capitals experiencing a decline in their property markets.

According to the Domain House Price Report, house prices dropped during March quarter 2016 for the first time since the September 2014 quarter. Meanwhile, unit prices continued to decrease as they had throughout the previous year. The housing market reported a 4.1% increase in prices over 12 months, whereas unit prices fell by 3.2%.

“Brisbane has now recorded seven consecutive quarters of falling unit prices with the recent apartment building boom having pushed supply ahead of demand,” says Domain Group’s chief economist Andrew Wilson. “The local house market has also failed to build on a solid finish to

2015, with the median house price falling to $512,809.”

Wilson describes Brisbane’s problems as “structural”, citing the poor economy. Significantly low migration rates are also having a negative effect on the Southeast Queensland property market. House prices are experiencing the “flow-on impact” of increasing unemployment rates, especially as Brisbane is a mining capital, says REA Group chief economist Nerida Conisbee.

However, REIA president Neville Sanders says Queensland has reported “the largest increase of 0.7%” in terms of the number of owner-occupied finance commitments. Moreover, a market update by Eliza Owen, market analyst at, reports that unit sales in Brisbane increased by over 12% in the past 12 months, as did rental rates. By contrast, rental rates for houses remained steady, although sales also rose by 11.63%.

In both markets, rental yields are quite strong. This is likely because of Brisbane’s good reputation – in March, it was regarded as “the most stable city in Australia”, wrote Olivia Lambert in a piece published on In the same article, REIQ CEO Antonia Mercorella commented that Brisbane’s edge over capitals like Sydney and Melbourne was its comparatively low house prices. The influx of units is also considered by Mercorella to be a positive, as they offers a new lifestyle to the locals.

The presence of offshore buyers, especially the Chinese, in the apartment market could also help turn Queensland’s situation around. Conisbee says property is a “preferred investment class” for these investors. This explains the rise in the number of apartments as the number of houses decreases.

The city of Logan is currently reporting moderate price growth despite a period of underperformance likely due to the building boom, Wilson notes. Moreover, houses in the suburb of Cabarlah in Toowoomba saw significant growth at a rate of 49% over the past 12 months, following 69% growth over the past three years and 48% growth over the previous five years. Simone Files, property sales consultant at Toowoomba City Realty, expects consistent house sales here in the near future as retirees flock to the area in the hope of saving on the maintenance costs of larger homes.

“Several large infrastructure projects will significantly increase the number of jobs for locals in the region,” Files notes. “Cabarlah will see an increase in the number of sales, as relocating families will look to embrace the lifestyle change that is on offer only 15km from Toowoomba’s CBD. The opening of the Highfields State Secondary College in 2015 has also contributed to this.”

With the expectation that Toowoomba’s population will triple over the next two decades, more than 500 lots with areas of 600–800sqm are set for release by the Avenues of Highfields estate, located on the border of Cabarlah and neighbouring Highfields. “The best opportunity for growth will be in the larger allotments that can be land banked for the moment and split in the years to come,” Files says.

Meanwhile, one-bedroom apartments in Wynnum West provide considerable yields as well, according to Conisbee.

“The current property market in Wynnum West is quite diverse as the area is also quite large,” says Nina Adams, principal at Century21 Adams & Costello. “We have entry-level homes in the area from $400,000 and executive homes to $900,000. The area is being rebuilt along the hilltop ridge, which offers views to the city and the bay. Some of the highest blocks in the area, such as Sibley Road, have had new homes built. This in turn has created some exclusive enclaves within the area, which is ideally situated close to transport routes (trains), major shopping precincts, waterfront and major arterial roads leading to the airport, Gold Coast and Sunshine Coast.”

Furthermore, the unit market in Wongaling Beach recorded 47% growth over the past year following a three-year growth rate of 26%. This market has the third-highest average annual growth rate in Queensland at 20.1%. “Brisbane has been slow, but it is starting to improve,” Conisbee says.



 Perth’s prices nosedive in comparison with other capitals

 Following a price increase back in the December 2015 quarter, house prices in Perth are coming back down to earth, according to the Domain House Price Report for March quarter 2016

 Nerida Conisbee, chief economist at REA Group, explains that overall conditions in the Perth housing market are still positive; however, they have slowed significantly since last year. “The gap between housing demand and supply is narrowing, driven by high levels of developments. While supply has been high, this is starting to moderate across almost all cities.”

In Perth, the median house price decreased during March quarter 2016 despite a slight rise in the previous quarter (the capital’s first increase in a year). According to Domain chief economist Andrew Wilson, this reflects how the capital will undergo “a slow journey back to price growth” following several years of decline. And Conisbee says that if the economic and political situation remains consistent, Perth should sustain growth in 2016 even if it is weaker than that of 2015.

Specifically, house prices experienced a 4.7% drop by the end of March quarter 2016 – possibly the biggest decrease of all the Australian capitals. The same was true for the unit market, as prices declined by 3.7% in the same quarter. In total, the 12-month price drop was 5.1%, the most significant decrease since late 2011. The downslide was particularly strong in regional WA, which saw 11.23% negative growth over the past year.

Rental rates in Perth plummeted by over 8%, based on the latest market update by Eliza Owen, market analyst at And in an 8 April media release, CoreLogic RP Data research analyst Cameron Kusher said, “We have been tracking the annual change in capital city rents since 1996 and this is the first time we have seen rental rates falling.”

The weakened economic conditions in Australia following the mining boom have been particularly detrimental to WA. The lack of employment opportunities may limit the demand for housing and population growth in this area, according to Conisbee. The state’s economy is having a negative impact on house prices. “Housing approval numbers are declining, while apartments remain flat,” she says.

“The economy hasn’t been performing well for some time,” Owen adds. “Resources have been diverted into the housing sector, which is not as productive as those of mining, which has suffered over 2015 as the commodity price index has halved.”

Nonetheless, “some of the budget suburbs in Perth are still doing OK,” Wilson says. “First-time buyers are active there.” For instance, the house market in the suburb of Jarrahdale is sustaining growth in the face of this decline. Growth over the past 12 months was 50%, up from 45% and 40% in the past three and five years, respectively. Overall property sales recovered by 20% in the week of 21 April following a drop in the previous week, and 19% of these were house sales.

According to an article published on, Hayden Groves, president of REIWA, believes the median house price may increase as residents trade up to higher-priced homes. Moreover, the decreasing house prices represent a rise in affordability, which may reverse the region’s current direction. Perth also has an edge on Sydney in terms of housing development, Conisbee notes.

Meanwhile, units in Crawley have increased in value by 49% over the past year. The unit market in Wannanup also experienced remarkable growth from -14% five years ago to 41% in the previous 12 months. Groves suggests the supply of apartments is about to increase because some building projects are almost finished, but “supply is likely to remain at healthy levels”.

Furthermore, apartments in general are in demand in the inner-suburban areas of cities like Perth, given the nationwide shift to apartment living, according to Conisbee. And Owen notes that the lower prices of units cause their rental yields to surpass the yields of houses, making such properties a better investment option.

Lloyd Jenkins, managing director of CBRE Group in Perth, suggested in a Sydney Morning Herald article that, despite the negative growth, the time may be ripe for investors to consider Perth, given its affordability compared to other regions in Eastern Australia.

Ruth Stroppiana, chief economist at Moody’s Analytics, supports the idea that Perth is merely bottoming out in terms of the commodity cycle – she expects Perth to report recovery in 2017 and 2018. This process should be helped by the sustained population growth and migration to the capital.

Conisbee also believes growth will be maintained, though it will be moderate.

“Western Australia is surprisingly not doing too badly despite rising unemployment,” she states. “Strong retail trade and construction activity is flowing through to economic growth.”

Wilson adds that unemployment rates began dropping in March, signalling recovery. “Perth still has prospects of finishing in the black by the end of this year.”



 Adelaide joins other Australian capitals in housing decline

 In a turnaround from last year, the median house price in Adelaide dropped this quarter by 0.5%, representing the “sharpest decline since September 2012”, according to the Domain House Price Report for March quarter 2016

 Within the next 12 months, South Australia is expected to be the weakest performer of all the Australian capitals. Falling prices in the housing market are “a consolidating result for Adelaide after a strong finish last year”, says Andrew Wilson, Domain chief economist. “Similar to other capitals,

Adelaide has experienced a flattening of prices growth, with future growth likely at a slower rate than in recent years.”

“The market was very stagnant,” confirms Eliza Owen, market analyst at “Adelaide houses grew a modest 3.75% in the year to March, but this is marginal considering that the median house is only worth $436,000.

“The fact is that the economy is not performing well. Unemployment has trended down markedly and is now just 5.7%, but participation has also fallen … if the people giving up the job search are no longer counted as a part of the labour force, the unemployment rate will shrink without people gaining more jobs. Furthermore, the nature of jobs secured in the economy is becoming more precarious. This is signalled by historically low wage growth, which was just 2.2% in the year to 2015.”

Nonetheless, unit prices remained consistent during this period, and of all the Australian capitals only Adelaide did not report a price drop. Rather, over the past 12 months the capital reported price increases of 2.2% and 3.4% for units and houses, respectively.

Adelaide-based French firm DCNS recently won a contract for a large submarine-building project, wrote Paul Starick, chief reporter at The Advertiser, in an article published in April on This could potentially generate many jobs and help improve SA’s economy and property market. And according to REA Group chief economist Nerida Conisbee, a proposal has been made to include funds for housing and the expansion of public transport in the federal budget, thus boosting investment.

She adds that investment activity, especially in the apartment market, remains high, especially with the influx of overseas buyers. Chinese investors are particularly interested in this market, despite the overall decline in such activity throughout the country.

“Consumer sentiment remains more optimistic than pessimistic,” Conisbee says. As long as there is no negative gearing, growth should continue to be slow and steady.

Greg Troughton, CEO of REISA, stated in an article in The Advertiser Real Estate that, despite the region’s poor performance this quarter, both local and interstate buyers considered properties in Adelaide to be value for money. Moreover, according to The Advertiser Real Estate reporter Tom Dougherty, the auction market is strong, recording a clearance rate of 63.6% in the first week of April, with a further increase in the following week. blogger Sarah Millar says SA has a tendency to feature in the top 10 suburbs of the site’s Top Sellers Markets, which implies the state is still desirable. In fact, three Adelaide suburbs were featured in the top 10 hotspots for houses, while one suburb, Norwood, also made the equivalent list for units.

The metro areas displayed more growth than regional areas, Owen reports in her April market update. The rental rate for houses in Adelaide rose by 1.33% to $380, whereas the rate in the country was maintained at $270. The metropolitan suburb of College Park has a strong housing market and the second-highest median price in SA. Over the past 12 months, this area showed 50% growth, up from 44% growth three years ago but down from 85% growth five years previously. College Park also reported a quarterly growth rate of 28%, the second highest in SA and eighth in the entire nation. Furthermore, its vacancy rate is a rather low 1.1%, likely due to the presence of the many educational institutions that give this suburb its name.

In the unit market, however, rental rates increased by 6.67% in regional SA, while rates in Adelaide remained unchanged throughout the year. The inner-city suburb of Goodwood was the top performer, recording 48% growth over the past year. This continues a trend seen over the past five years.

Nonetheless, Conisbee advises that “in smaller cities apartment development should be viewed more carefully, particularly given there is generally less demand”. But she adds that a well-positioned apartment close to amenities such as shops, transport and universities should be a good investment. Goodwood certainly fulfils these requirements, and its location just south of the Royal Adelaide Showgrounds is also likely to help its economy.



Hobart no longer one of Australia’s forgotten cities

The Tasmanian capital has made a significant mark on the country’s property market in terms of capital growth

Nerida Conisbee, REA Group’s chief economist says “Tasmania is surprising in its strength for housing”.

“Unemployment is declining in that state, and housing demand is improving. Tasmanian housing stats are the highest in 21 years,” she says.

In an April market update, Eliza Owen, market analyst at OnTheHouse., reports that houses in Hobart grew a solid 4.82% in the year to March. She observes that this performance had been anticipated since peaks and troughs in Hobart’s house market generally follow movements in the Sydney market. “Hobart especially had room for capital growth off the back of a cyclical trough, where annual growth was -9.13% in 2012.”

Owen theorises that upswings in the Sydney market may cause investors to consider nearby markets that are cheaper. Moreover, its movements serve as a sign that buying and selling property even in other markets is a good idea at this time.

“The markets followed Sydney growth at a lag, which would explain why they are coming into peak growth at the moment. They might be expected to ease in growth by the fourth quarter this year,” she states.

Owen also highlights how Hobart’s transition from a mining-focused region to a tourism-centred one has helped heighten confidence in the state’s economy. More income has been generated through visits from both interstate and international visitors, especially those from China, and export subsidies provided by the federal government.

Domain chief economist Andrew Wilson supports this view in the Domain House Price Report for March quarter 2016. Median house prices rose by 4.3% in this quarter, building on the 3.5% uptick observed last quarter. The report notes that in terms of annual price growth Hobart is the second-best performer out of all Australian capitals, with an increase of 7.6%.

“After a lengthy period of subdued growth, Hobart continues to play catch-up, recording the strongest price increase of all capitals across the March quarter,” says Wilson. “Despite further likely rises, Hobart remains the most affordable Australian capital city.”

This affordability is likely playing a role in the region’s ascent.

“There’s some new development, but it’s a very small market. The outcomes tend to be quite volatile. But Hobart’s certainly the strongest market in terms of growth. There are some good-value opportunities, with properties under $400,000. Investors are getting interested, and rents are growing quite sharply. The affordability perception is driving the market, and Hobart is ticking all of the boxes for investors at the moment, including capital growth.”

The suburb of Clarendon Vale is the top performer in this state’s housing market with respect to growth. It recorded 37% growth over the past 12 months at a low median price of $173,000. This is a considerable jump from its 6% growth five years previously. Rental yields are a high 7% as well, which is beneficial for investors. In fact, Tasmania reported the best yields in Australia’s housing market, Conisbee indicates.

“Even though it is a low-cost market to buy, it does have an active rental market that achieves comparably high rents.”

This observation supports Conisbee’s assertion that the lowest-cost properties generate the highest yields.

Owen believes that some areas of Australia will see units experiencing losses in comparison to houses, and it seems Tasmania is one example. The unit market saw a significant drop of 6.2% in this quarter, and the total decrease over the past 12 months was 3.3%. Nonetheless, the suburb of Somerset in regional Tasmania balked this trend and still reported 37% growth, up from 12% three years ago.

“With the housing market coming into the downswing part of its cycle, the house and unit markets in many parts of the country will start to mirror other signals in the economy, and adjust to a more reasonable price level,” Owen says.



 Darwin continues downslide in the face of economic problems

 With the downturn experienced by Darwin’s mining sector, the property market continues to struggle

 According to the Domain House Price Report, house prices saw a significant decline of 4.9% in

March quarter 2016, sustaining a trend that began last year. While the drop in unit prices was gentler, they were not spared as unit prices dipped by 4.1%.

In fact, Darwin reported the poorest performance out of all the Australian capitals, with house and unit prices decreasing by 3.3% and 8.3%, respectively, over the previous year.

In an report in April, Quentin Kilian, CEO of REINT, commented that house sales were at their lowest since the inception of the Institute’s data-gathering operations in 1999. He attributed this in part to the elimination of the First Home Owner Grant for buying established homes back in January 2015.

According to market analyst Eliza Owen, rental rates for both types of properties dropped in Darwin. However, over a 12-month period the 11.34% increase in the rental yield of units exceeded that of houses at 6.72%.

“In some places, I believe units will suffer greater losses than houses because units were developed in response to speculative investment, as opposed to desirability for people to live in them,” she explains. In the countryside, the decrease is even higher for houses. By contrast, the price decline for regional units was less than that reported for the metro.

Domain chief economist Andrew Wilson says “the Darwin unit market remains vulnerable to further price falls as a result of recent significant development of new apartment complexes”. In the country, units have often been developed on large blocks with many other apartments instead of on boutique blocks that are “more quiet and spacious”. When investor demand fades, prices of units far from the CBD will drop as well. There is also limited demand for fly-in fly-out housing, which has been regarded as another reason for Darwin’s weak showing.

REIA president Neville Sanders says the NT has seen the “largest decrease of 2%” in terms of number of owner-occupied finance commitments. But in spite of the generally unfavourable outlook for the territory, Tod Peterson of Peterson’s Property Search says Darwin’s property market cycle is the opposite of that experienced by bigger markets such as Sydney and Melbourne. Thus, the region’s status may still improve this year.

For instance, the highly affordable suburb of Katherine South reported 18% growth in the past year. Its 2% growth this quarter indicates it is on an upswing likely due to its low prices attracting investors.



 Canberra continues to stand out in spite of negativity

 After a strong period of growth, Canberra has been affected by the general downturn in Australia’s property market and is now showing signs of decline as a result of excessive supply

 According to the Domain House Price Report, the median house price in Canberra dropped by 1.4% in March quarter 2016, although the capital reported a 4.8% price hike over the 12 months to March. Meanwhile, unit prices dropped by 2.8% in the same quarter, despite an increase in the previous quarter. Thus, the current reported annual growth rate is -4.7%.

“An oversupply of new apartments is affecting unit prices in Canberra,” says Domain chief economist Andrew Wilson. He adds that the rebounding of house prices will depend on the local economy, especially the federal budget.

Nevertheless, market analyst Eliza Owen of indicates that the ACT was one of the “capital growth standouts” in her April market update. Specifically, capital growth for houses over the past 12 months was high, at 6.39%. “These movements are expected,” she says. “Over the last decade, the Australian Capital Territory and Hobart house markets have generally experienced peaks and troughs just after Sydney.”

Owen suggests that as properties become less affordable in Sydney during upticks in the property cycle, investors seek out cheaper markets in the vicinity. Moreover, movements in the Sydney market may dictate the feasibility of buying or selling in other states; thus, the ACT is expected to peak soon, following the decline seen in Sydney.

The jump in job opportunities (due to the federal government lifting a public service hiring freeze that has been in place for the last two years) also contributed to Canberra’s growth.

However, “a large reduction in housing approvals in Canberra will impact house prices in that area”, says Nerida Conisbee, chief economist at REA Group. “Apartment numbers are increasing while houses are declining. We therefore expect growth.”

In addition, the limited housing supply may actually be an investment opportunity for offshore buyers. House prices are increasing, but unit prices are decreasing in reflection of supply levels, and the unit market may be seeing some oversupply. The rental rates for houses have risen more than for units, possibly confirming this idea. For instance, the house market in the suburb of Turner has maintained high growth rates over the past five years, although growth dipped slightly last year compared to the previous three years.

According to David Whittem, principal at First National Real Estate Capital, many investors consider properties in this suburb because of the abundance of tenants attracted to its location. Substantial redevelopment on large blocks of land also enhances the suburb’s value.

The unit markets in Hughes and Coombs have also made significant splashes in the past 12 months. Specifically, Hughes reported an average annual growth rate of 25.3%, the highest in ACT this quarter. The vacancy rate also dropped 0.2% over the year to a very low 0.7%, signifying the heightened demand for this suburb that’s only 6km from Canberra.



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