2 March 2021

Canberra home prices surge 2 per cent in boom market

| Ian Bushnell
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Weston Creek

Demand for houses continues to drive the market. Photo: File.

Canberra home prices rose another 2 per cent in February amid a rush to buy into a market in full gallop.

CoreLogic says Australia’s home prices are rising month-to-month faster than at any time in the last 17 years, spurred on by a combination of record-low mortgage rates, improving economic conditions, government incentives and low advertised supply levels.

In Canberra, the last three weekends have produced clearance rates above 80 per cent and increasing median sales figures.

In a sign that the record results may tempt more owners, 79 properties were listed last weekend for action, compared with 55 and 48 the previous two weekends. The clearance rate was 84 per cent and the median sales result was nearly a million dollars.

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Over the past three weekends, the median sale price has gone from $800,000 to $910,000. Leading the top 10 was a four-bedroom house in Deakin that went for $2.7 million, while in 10th place a four-bedroom house in Dickson sold for $1,430,000.

Most of the top 10 were in the Inner South and North, apart from a six-bedroom house in Nicholls in Gungahlin that brought $2,021,000.

Overall, most of the properties were houses with a smattering of townhouses and terraces.

The cheapest home was a two-bedroom townhouse that sold for $461,000.

Houses are driving the Canberra market, rising 2.2 per cent in February for a median value of $797,421.

Units rose as well, but only a modest 0.7 per cent for a median value of $479,943. Overall the median dwelling value is $706,454.

Over the 12 months, house prices have risen 11 per cent, and units more than half of that at 5.2 per cent.

The booming market coincides with record loan approvals for new builds, driven by the Federal Government’s HomeBuilder grant.

The latest lending data from the ABS shows the number of loans to Canberra owner-occupiers for constructing new dwellings in the three months to January 2021 compared to the same time last year rose 87.4 per cent.

National CoreLogic Home Value Index

National CoreLogic Home Value Index tables. Image: CoreLogic.

Housing Industry Association economist Angela Lillicrap said the increase in lending in January coincided with the surge seen in HIA’s New Home Sales in December.

“Households rushed to finalise contracts to build a new home before the end of the 31 December 2020 deadline to access the $25,000 grant,” she said.

“The number of construction loans to owner-occupiers in the three months to January 2021 is 45.8 per cent higher than the previous quarter and is more than double the same time the previous year.”

She said low-interest rates, rising house prices, higher savings and a demographic shift in demand towards detached housing and regional areas should ensure ongoing demand for new homes into 2021.

CoreLogic says housing values are rising across each of the capital cities and the rest of state regions, demonstrating the diverse nature of this upswing.

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Research director Tim Lawless said a synchronised growth phase like this hadn’t been seen in Australia for more than a decade.

“The last time we saw a sustained period where every capital city and rest of state region was rising in value was mid-2009 through to early 2010, as post-GFC stimulus fueled buyer demand,” he said.

One of the factors driving housing prices higher is low advertised supply levels. The number of properties advertised for sale nationally remains 26.2 per cent below 2020 levels over the 28 days ending 21 February.

CoreLogic’s estimate of settled house sales rose to be 17.9 per cent above the decade average over the past six months. Settled unit sales have also trended higher but remain slightly below the decade average (-0.8%), reflecting the falling demand for higher density styles of properties.

“Buyers are likely confronting a sense of FOMO [fear of missing out] which limits their ability to negotiate,” Mr Lawless said.

But new listing numbers could lift in March, with CoreLogic’s real estate platform data indicating agents are becoming more active.

“Although new listings are likely to track higher over coming months if buyer demand continues to lift, it’s likely overall advertised stock levels will remain low,” Mr Lawless said.

“Serious buyers would be well advised to have their financing preapproved and be ready to act fast to secure a property under such tight supply conditions.”

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HiddenDragon9:49 pm 04 Mar 21

Hooray! – we’re one of the richest (on paper) countries in the world with one of the dumbest economies – having dropped from 55 to 87 on the ranking in the last quarter century –

https://atlas.cid.harvard.edu/rankings

What could possibly go wrong…….?

ACT Government should be mandating apartment buildings with 3 bedrooms or large two bedroom units with multiple living areas. The vast majority of units being built in Canberra by the likes of Geocon are profit maximising 1 bedroom properties.

Canberra is building the smallest apartments in Australia and amongst the smallest in the world.

This aspect of the problem is on the Government and planning office.

Absolutely agree Brendan. Unlike some on here who seem to see apartments as almost the work of the devil, I don’t mind densification of the city to some degree. But its got to be the right type – and requirements for bigger apartments, in particular a reasonable proportion of 3 bedroom or larger would go some way to giving genuine choice in the market, and letting apartments become a viable housing choice for families. After all, its not like its a new concept in most parts of the world – but in a lot of those areas, there is a good mix of apartment styles that allows that ato happen.

As you say, its just about profit maximisation in Canberra at the moment. Given we have a government that loves crazy and often ill-informed regulation, how about some ‘better regulation’ to ensure genuinely good outcomes happen.

Lol sorry BJ, don’t know where the Brendan came from ha in the first sentence – tired eyes is all I can blame for poor proofreading

I really don’t get how you say it’s only about profit as if it’s a bad thing.

These units only get sold and profit made if there is a market demand for them.

If people don’t want to live in tiny one bedroom apartments, they wouldn’t buy them and there wouldn’t be any profit.

If the market preferenced larger apartments, the demand would make their value skyrocket and these apparently “all about profit” developers would build them.

Developers build what the market tells them too.

I don’t think its a reasonable assumption to think that a perfectly competitive market exists Chewy in the Canberra housing market. In such a case, as you suggest the market should do the work to broadly match preferences of those demanding the product to what is being supplied.

Nice on paper, but unlikely in practice. Its clear there is significant market failure in the Canberra housing market – you only have to look at the monopolist behaviour of Government with land release, let alone the raft of other issues impacting the market.

With vacancy rates where they are in this town, the quite skewed income distribution, its inevitable that there is a significant proportion of people that I’d expect aren’t anywhere near having their preferences met in the housing they invariably are able to access. For many, its a case of what can I manage to secure, rather then getting what they would prefer to secure. They much prefer a roof over their head then no roof at all, even if it doesn’t really meet their preferences or needs.

The real story is a lot more complex than ‘developers build what the market tells them to’…. they’ll build what they can sell, or think they can sell (doesn’t always go to plan of course). Doesn’t necessarily equate to preferences being truly met.

Its

JS9,
I disagree because preferences and wants are not met with housing almost always.

I’d prefer to live in a mansion but I can’t afford it, so I’ll choose an alternative.

The problem with saying developers should build bigger units, with more bedrooms is it assumes there would be no cost implication for doing so.

What would actually happen is that these new, bigger apartments would be even more expensive and the same people you say aren’t having their preferences met, wouldn’t be able to afford these bigger places anyway.

You have however struck on the main market problem (I don’t know if it’s a failure as such). And that is the Government’s inability to release sufficient land and their policy and strategy of significant urban infill.

This drives increases in housing unaffordability that then leads to people buying these smaller apartments because that’s what they can afford.

The developers are only doing what the market tells them too.

Chewy I’m surprised by your views based on some of your previous comments over the years.

I’m not sure that property Developers are giving what the market wants. Market surveys and property sales growth keeps showing that the vast vast majority in Canberra want houses.

Small units in Canberra are often slow to sell (but profitable for the builders) in comparison to bigger builds and very often these units are not actually being occupied according to the Census. Also many one bedroom unit sales in Canberra are sold to Chinese investors.

Large 3 bedroom units in good areas will hopefully encourage older house owners to sell their properties to young families and move themselves into higher density housing that still meets their needs.

There should be a secondary effect of releasing bigger units onto the market that encourages higher density. European cities with much larger units than Canberra also have much higher population density.

BJ,
As I said above, what people want in surveys is not necessarily what they can afford or what the market actually wants. Preferences are not the market.

You’re even admitting that i’m right if you think the units have been selling to Chinese investors and remaining empty, with developers making good profits. That is the market at work.

What you are actually asking for is that the government should intervene in the market to create a different mix of dwellings. I wouldn’t disagree with the wish for better designs or mixes in this space but that has little to do with the market or developers delivering what the market tells them too.

I think we must both be misunderstanding each other. I wasn’t saying you were wrong, just surprised by your views.

Personally, I don’t think it’s good to have empty 1 bedroom apartments owned by foreign investors. I think there needs to be more large apartments available not just 1 beddies that are short term profit making for the developer but that will create longer term problems for the city around the required infrastructure to support the tiny apartments and their population.

BJ,
I agree its not good for anyone to have a significant amount of apartments empty.

Governments, both local and Federal should protect against that with more appropriate taxation settings on investment properties.

Capital Retro11:21 am 04 Mar 21

The ACT government and its controlled land and housing policies has alienated the young people who can’t afford their first home and the retired people who can’t afford to downsize so, who is benefitting from this bubble?

Awesome news. ACT Labor and the greens really looking out for working families with their housing policies, land rates rises and land tax hikes. LOL

Keep voting for them. Doing wonders for my investment portfolio.

Angry old man yells at cloud.s….. like every other comment, the inherent selfish motives always find a way to shine through.

You wanting to live in a fantasy land does not make me selfish. I’m actually quite happy about it. Might get rid of the underclass who can’t afford to live here soon.

When are you packing up?

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