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Apartment glut to dampen unit prices further

By Charlotte Harper - 12 July 2016 6

Grey clouds over apartments

The price of units in Canberra will drop 4 per cent in the next three years – representing a 12 per cent decline in real terms – after falling 4 per cent last financial year due to an oversupply, according to industry analyst and economic forecaster BIS Shrapnel.

“There is still a significant pipeline of apartment construction to come through and this will continue to have a dampening effect on the market,” says BIS Shrapnel senior manager and author of the company’s Residential Property Prospects, 2016 to 2019 report Angie Zigomanis.

Mr Zigomanis predicts the capital’s median house price will rise by 6 per cent over the three years to June 2019, reflecting a decline of 2 per cent in real terms.

His report estimates the median house price here has experienced a modest rise of 4 per cent over 2015/16 to $595,000 at June 2016. New dwelling activity in Canberra had been particularly strong in recent years, with apartment development being sustained at record levels.

The report estimates that there is an underlying oversupply in the Canberra market, although it says reported vacancy rate figures have recently been below the balanced rate of 3 per cent and the impact of cuts to Federal Government departments appears to be dissipating. The rise in net interstate migration outflows was now turning and there was likely to be a balance or potential net inflow in 2016/17.

“Moreover, net overseas migration inflows have increased since bottoming in 2013/14, largely due to the recovery in overseas student growth that has coincided with the lower Australian dollar,” Mr Zigomanis says.

“Canberra also has the highest incomes of the capital cities and affordability is not as strained as in the other cities.”

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