Best suburbs to invest in Canberra 2021
With 2020 looming it's time to forecast where the Canberra property market is likely to be heading next year.
Overall, there is certainly more optimism in the Australian market compared to this time last year. This is largely thanks to the Coalition's election victory, the Reserve Bank cutting interest rates, and the generally more lenient rules around borrowing, making it easier for investors to access finance.
This has given the market some momentum, most visibly in the second half of the year where some areas, most noticeably Sydney and Melbourne, have picked up. Most analysts are however forecasting modest price growth in 2020.
Let's now take a look at how the Canberra market performed in 2019, and what analysts predict for 2020.
What did the property market in Canberra look like in 2019?
Overall performance of the property market in Canberra over the past year has been steady.
According to SQM Research's Boom and Bust Report 2020, Canberra dwelling values advanced +2.0% for the year to October 2019. This is actually a positive result as the combined capital city average is down overall -2.5% for this timeframe, with Perth the worst performer down -8.7%.
This positive result is at least partially due to the First Home Owners stamp duty exemptions, which kicked in from 1 July 2019 and prompted those who qualify to make a purchase.
"According to SQM Research's Boom and Bust Report 2020, Canberra dwelling values advanced +2.0% for the year to October 2019"
Canberra property market forecast 2020
Domain's Property Price Forecasts for 2020 predicts the Canberra housing market to grow 4% – 6%, with units forecast to grow more modestly at 1% – 3%. Overall conditions are predicted to remain steady, with the recent moderate price growth forecast to continue.
SQM Research have a more detailed forecast methodology which takes into account a number of different scenarios. With an unchanged cash rate (0.75%), a recovering economy and no more intervention from the Australian Prudential Regulation Authority (APRA) - who regulates the banking sector - they predict positive growth of between +3% to +7% for Canberra dwellings.
This optimism rises further - with forecast growth of +4% to +8% - if the RBA cuts rates to 0.50%. If trade talks collapse, the economy weakens and the RBA cuts rates to zero in 2020 however, they predict returns of +4% to +7% from an investment in Canberra property.
"Domain's Property Price Forecasts predicts the Canberra housing market to grow 4% – 6%, with units forecast to grow 1% – 3% in 2020"
QBE's Australian Housing Outlook 2018 - 2021 predicts Canberra dwellings to grow +10.4% growth between 2019 and 2021, with median house prices to rise to $745,000 by June 2021.
Moody's - using CoreLogic data - forecasts 2020 to be a stronger year for the Canberra property market, with house values predicted to grow +5.6% and units +4.2%.
How are Canberra house prices expected to change in 2020?
As we have seen, Canberra property price forecasts are generally positive. Domain believes the local market in the nation's capital will be underpinned in the year ahead by:
- Strong population growth, currently at +1.8% per annum
- Low unemployment due to job growth in the public and education sector
Both factors are helping to mitigate the oversupply of units in the ACT, but there remains pressure on houses which are not being built at the same rate.
What's the Canberra apartment market like?
Domain believes that Canberra's ongoing building boom is going to constrict unit price growth, as more developments come onstream - with approvals up 30% in 2019 over the previous year.
In fact, they identify this as the primary reason why Canberra's median unit price has remained fairly static since 2010, with median prices in the region of $400,000.
The Canberra rental market
Data from Domain's most recent rental report identifies Canberra's median weekly asking rent as the highest across all capital cities, at $550 per week for houses. Median asking rents for units at $470 per week. The biggest increases for rent were recorded in the suburb of Belconnen.
"Canberra's median weekly asking rent as the highest across the capital cities, at $550 per week for houses, with units at $470 per week"
According to QBE's Australian Housing Outlook 2019 - 2022 strong population growth in Canberra has impacted vacancy rates, which were as low as 0.6% in March of this year.
This has underpinned strong rental growth with median rents up for houses (21%) and units (16%) between June 2016 and March 2019. The relative oversupply of units in the city is the primary factor behind the lower rental growth of this sector compared to houses.
Best suburbs to invest in Canberra
According to SQM Research suburbs around Belconnen are tipped to perform well. This is due to its proximity to the University of Canberra, the city centre and Lake Ginninderra. Over the last 12 months, the suburb has had a median house price of $388,000, with units priced at a median of $378,000.
"QBE's Australian Housing Outlook predicts median house prices to rise to $745,000 by 2021"
QBE's Australian Housing Outlook predicts median house prices to rise to $745,000 by 2021, so suburbs that offer better value (and growth prospects) will be in-demand.
If you are looking for a value investment, then you will want to research suburbs with affordable price points. Here are five postcodes which all fall well below the city's median house price, which currently sits at $672,000: