Investors in Canberra are posting gains comparable to the growth achieved during the Sydney pandemic.
John McGrath, executive director of McGrath Estate Agents, said Canberra’s 29% rise in house prices over the past year was just a pinch of Sydney’s 30.4%, making it a “quiet achievement” among the capitals of the east coast.
“It’s had a pretty steady ride through the pandemic thanks to its stable local economy, unique job security as a government city, relatively low infection rates, fewer restrictions and lots of incentives like everywhere,” said Mr McGrath.
What makes Canberra viable?
The 2022 McGrath Report called Canberra the “Capital of Bush,” with a small population of 431,500 living in low-density conditions amid wide open spaces.
“These attributes, which have become vastly more prized during the pandemic, along with a celebrated cultural calendar, thriving food scene and world-class education options, have all contributed to Canberra’s gradually rising home values,” said Mr McGrath.
Investor activity has increased in Canberra over the past year.
The latest statistics from the Australian Bureau of Statistics (ABS) show that approximately $236 million in investment loans was taken out in June 2021, a significantly higher figure than the $84 million achieved in the same period last year.
The low supply of new land and strong demand from upgraders benefiting from both ultra-low interest rates and reduced stamp duties.
Furthermore, there is strong activity by first-time buyers in the housing market. In fact, Canberra recorded the highest take-up of new loans for first-time homebuyers in the June quarter.
Home buyers also benefited from government incentives in the form of stamp duty exemptions and concessions.
The ACT has been at the forefront of stamp duty reforms – it has a 20-year commitment to abolish the tax.
“Thousands of young buyers have participated in the Home Buyer Concession Scheme, which has waived stamp duty on both new and existing homes at all price levels for the past two years,” said Mr McGrath, adding that this support scheme will see a lot of additional demand for homes over apartments. .
The ACT’s COVID-19 Economic Survival Package included stamp duty exemptions and discounts on residential blocks and off-the-plan apartments in FY 2021.
Mr McGrath said this contributed to a 13% increase in the median of apartments in the city over the past 12 months to $547,484.
This was comparable to 13.6% growth in the Sydney apartment market.
“Whether you had invested in a house in Canberra or a house in Sydney 12 months ago, you would have achieved a 30% return on your investment, based on capital gains alone,” said Mr McGrath.
“The big difference is that the house in Canberra would have been about $300,000 cheaper to buy.”
Mr McGrath believes that if this trajectory continues, Canberra could potentially enter Sydney and Melbourne as a decoupled market, with property values significantly higher than the other smaller capitals.
Photo by Prakash Khanal on Unsplash.
Top Suburbs: Toowong, Cardiff South, Marrickville, Balga, Coolbellup
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