26 March 2021

Buying property in Canberra? You might need to hear this first

| Sharon Kelley
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Investors looking to buy property might want to look further afield than Canberra for a return on the investment. Photo: File.

The Canberra property market continues to break records and according to 1Group Property Advisory Director Julian Muldoon, that means property investors may want to consider looking further afield for an investment property.

“The factors driving the market are different in Canberra and if you are thinking about a property investment, there’s a lot to consider.

“It’s not necessarily a bad time to buy if you’re a keen investor and you’re acquiring property, but you need to be careful what you invest in and why, because not every market is moving at the same pace and our behaviour has shifted since COVID-19,” he said.

“It’s obviously a seller’s market, but for mum and dad investors, it’s always a tailored answer – everyone’s situation is really different.”

Industry leaders including Mr Muldoon from 1Group, RSM Australia Director Andrew Sykes and BAL Lawyers Director Benjamin Grady will present a free property investment seminar at the National Press Club on Tuesday 30 March from 10:00 am to 11:00 am, both in-person and online as a webinar.

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The event will hear research findings across the property industry that can help buyers decide which market is the most appropriate for their investment dollar, key trends across residential and commercial property investment, the practical implications of different strategies explained through case study examples and what to look for when buying or selling property.

Since the rise in necessity of working from home and prices rising in Canberra’s property market, both affordability and lifestyle factors mean the satellite towns around Canberra may look like a better investment proposition, but Mr Muldoon points out that ‘life as usual’ will return, and with that will come businesses who want staff back in the office.

“People want a better quality of life at a lower cost, and that means looking for a property in regional areas,” Mr Muldoon said.

“But, Homebuilder will end soon and Melbourne has a stamp duty extension which ends mid-year, and the bank assessments on interest and the relaxation of responsible lending rules mean credit applications are improving.”

“I’ve read some really fascinating data from the United Kingdom, 50 per cent of people looking for property in London are looking outside the capital, in the more regional areas,” Mr Muldoon said.

“In Australia, the Mornington Peninsula in Melbourne and the Northern Beaches in Sydney are thriving in terms of price – the pandemic has amplified that behaviour shift.”

If you would like to know more, attend the free Tips and traps of property investment seminar on Tuesday 30 March, 10:00 am to 11:00 am online, or 9:30 am to 11:00 am at the National Press Club. There is no cost to attend but bookings essential.

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Property investors are leaving Canberra and going elsewhere as the taxes are way too high. Buying an investment property in Canberra is not a good idea as the socialist ACT government charges the highest land costs/fees in Australia. You will pay land tax on any property you own and rent out, even if it’s a little $200k apartment, they will charge you huge fees (in other States you don’t pay any land tax until your land value is over a certain amount, around $700,000). Also, the ACT government has ‘rent control’, so investors cannot charge market rent. Once you have tenants in your property, you cannot ever increase the rent by more than Canberra CPI (which is only about $6 per week). And the ACT government increases the land taxes and rates exorbitantly and by more than CPI every year. So what is happening is that landlords are subsidising tenants. It’s really not worth the hassle (both financially and dealing with the incompetent ACT government) to own investment property in the ACT – go across the border to another state.

You are right. But rather than investing in rental property it is far better to put money into shares and/or property focussed ETFs and managed funds. Less stress, no tenants, no stamp duty, no rates and no land taxes.

Agree! I guess I prefer tangible things like property, and most of my tenants are great. I try to be a good landlord, but the ACT government makes it difficult as they keep bringing in more and more rules and it’s not financially viable any longer.
Thanks for the suggestions – I will look into managed funds as an option. Cheers.

Buying to rent out doesn’t make sense in Canberra. The government costs make for a poor investment, however across the border is a different story…

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