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Amid pandemic: Canberra bucks trend with continued growth
In comparison with the bigger capital cities like Sydney and Melbourne, Canberra stood in a better position during the initial impact of COVID-19, protected by its robust economy and unique job security, a new McGrath Estate Agents report found.
Amid pandemic: Canberra bucks trend with continued growth
In comparison with the bigger capital cities like Sydney and Melbourne, Canberra stood in a better position during the initial impact of COVID-19, protected by its robust economy and unique job security, a new McGrath Estate Agents report found.
When home values fell in Sydney, Melbourne and Brisbane, Canberra bucked the trend with continued growth, largely due to an incredibly low rate of infection – just 0.42 per cent of the nation’s cases by October 2020.
CoreLogic data revealed that the capital city’s median house price increased 7.4 per cent to $716,150 in FY20 and leapt to a record high in September, while the median apartment value gained 2.1 per cent to $444,181.
Canberra remained better placed economically to weather the virus, with fewer job losses per capital due to 32 per cent of locals working in government or hospitals, according to the report. Further, the booming construction sector’s ‘essential service’ qualification kept thousands of workers on job sites while social distancing restrictions were in place.
By August 2020, the ACT’s unemployment rate had increased only slightly to 4.2 per cent and was the lowest in the country, compared with Queensland’s 7.5 per cent, Victoria’s 7.1 per cent and NSW’s 6.7 per cent.
Supply and demand
Further proving Canberra’s resilience, CommSec’s latest economic performance report showed that ACT ranks third after Tasmania and Victoria based on strong demand from owner-occupiers, with the value of home loans up 31.2 per cent on long term averages.
In May 2020, Australia recorded the biggest monthly fall in new home loans since records began in July 2002 at -10.2 per cent. Of all the states and territories, the ACT was the only one to see an increase of 1.1 per cent, seasonally adjusted, due to ongoing strong demand from first home buyers and upgraders.
The report also highlighted that house prices rose at three times the speed of apartments in FY20 because of fewer land releases for new houses, thereby raising demand for existing homes and boosted competition from first home buyers, whose budgets could stretch beyond apartments in FY20 due to record-low interest rates.
Currently, the government is preferring to green-light new apartment developments over more land releases for houses, which is in line with its 2018 ACT Planning Strategy to convert Australia’s original ‘garden city’ with leafy streets and single houses into a more ‘compact and efficient city’ with greater housing diversity to cater for future population growth.
Latest figures show there was an 86.3 per cent increase in building commencements over the year to 31 March 2020 totalling 5,196 new homes – mostly apartments, compared with a -1.6 per cent decline nationally.
McGrath also found that Canberra’s rental market has shown more resilience than other capital cities, with online rental property searches up 75 per cent in August 2020 compared to a year ago.
Further, weekly rents for houses increased 1.8 per cent in the 12 months to October 2020, making it the country’s most expensive city to rent in. “It’s also hard to find what you want, with the vacancy rate in August less than half the national level at 0.8 per cent, the report noted.
Growth drivers
The ACT Government has outlined 50 measures worth $369 million in a multi-staged virus recovery plan to support local businesses, jobs and the economy.
Scores of projects in a $14 billion public works program announced in 2019 will be fast-tracked, including $35 million for public school repairs, new cycling and walking paths and upgrades to health facilities, sports grounds and parks across the city, Gungahlin, Belconnen, Woden and Tuggeranong.
New temporary stamp duty concessions for FY21 are expected to boost the construction sector and create jobs.
All owner occupiers who purchase land at any price; or an off-the-plan apartment or townhouse valued up to $500,000 will pay no stamp duty. Off-the-plan purchases between $500,000 and $750,000 will receive an $11,400 duty discount.
“Careful virus management will continue to support Canberra’s property market in FY21,” the report concluded.
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