Canberra Property – boom before the bust?

Kramer 27 October 2007 62

It seems the media is in a tizz at the moment about property prices. Canberra has been highlighted as one of the capital cities where property prices are booming. Although prices in the Canberra market do appear to be slightly overinflated, so with another interest rate rise looming, are we seeing the boom before the bust?

All this speculation is being driven by the latest price guide from Australian Property Monitors. They report an annual growth figure for Canberra houses of 17.7% and units 9.7% (figures for the quarter June to Sept 07 are 1.7% and 4.6% respectively). This equates to the average Canberra house price now coming in at $485,262 and an average unit price of $339,553 – wow!


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62 Responses to Canberra Property – boom before the bust?
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Lord Mælinar Lord Mælinar 8:18 am 30 Oct 07

Nyssa is not revealing the entireity of her *poor me* situation.

Mind mentioning the subsidised rent ? it’s still about $150/w isn’t it ?

Defence first homeowners grant ? that’ll boost your Government first homeowners grant to a sizeable % deposit.

Oh, and then there’s the subsidised mortgage rate from the NAB for Defence homebuyers that the ADF will inject money into.

Poor you. If you were being nannied any more, somebody would be changing your nappies.

VYBerlinaV8...the_original_and_best VYBerlinaV8...the_original_and_best 8:01 am 30 Oct 07

Nyssa, when you have that many people renting the market sets it’s own level.

Bear in mind that the property market is cyclic. There will be periods when the price doesn’t increase at all (or even goes down a little), and during these times are the ideal for buying property. During the 1990’s property didn’t increase in price at all, and thus dropped in real terms. I wouldn’t be at all surprised if we see something similar perhaps 2009-2015 or so. It will be a great time to buy investment properties!

nyssa76 nyssa76 4:58 pm 29 Oct 07

Special G, I do have a deposit. I’ve continued to save as the damn prices go up as I don’t want to be ‘caught short’. I don’t want to borrow 95% of the loan, I want to borrow 80%. If that’s stupid, then so be it. At least it would give me a little breathing room.

VY – yes and they’ll charge as high a rent as they like as no one will be able to buy a house.

VYBerlinaV8...the_original_and_best VYBerlinaV8...the_original_and_best 2:34 pm 29 Oct 07

As I’ve said before on this site, we are moving to a standard western property system whereby a small proportion own all the property, and everyone else rents.

Ingeegoodbee Ingeegoodbee 1:57 pm 29 Oct 07

… and when you get a massive drop in property values even the households that are having no trouble meeting their mortgage payments can get hit as the lenders move in seeking additional payments to cover the diference between the lower value of the property and the amount of the mortgage. Way uglier than a couple of rate rises.

Special G Special G 1:51 pm 29 Oct 07

So Nyssa what your saying is that you wish ill on investors who wil lose out by massive price drop and to those who slugged hard and bought their house. Maybe when you finally get a deposit together and buy your place that will happen.

GnT GnT 1:01 pm 29 Oct 07

Those of you who want to see more land relesed for residential purposes and a new town centre – have you heard of “North Weston” and “Molonglo”? – I think land is due to go on sale next year or the one after, to be developed into a new town centre (or “group centre” – like Weston Creek) in the next ten years or so.

GregW GregW 11:46 am 29 Oct 07

My thoughts:

Include stamp duty into the cost of the land, subsidise it for the affordable land blocks, and don’t charge it on transfer of the property. Yes there will be a small increase in property prices from it, but it will greatly help encourage investment and redevelopment.

Remove land tax, there are huge surpluses, is there any need?

Encourage high density redevelopment in the inner town centers, the type of people who can afford to live there will help prevent slums occurring.

Provide larger blocks on the outer suburbs, and allow minor subdivision on all large blocks.

Get rid of this heritage protection for residential properties nonsense.

Allows bids from developers to take over public housing blocks in prime locations (eg: reid, northbourne) and build more units/whatever in more distance. Tenants get new units, and don’t give me any nonsense about they deserve to live there. If the slobs won’t get a job, yes they can have a property but they’re not entitled to negotiate.

Stop building so many offices in civic and woden, spread the love.. It might be difficult to relocate, but you could atleast build more new departments in belconnen, gungahlin, tuggeranong etc..

Build another gungahlin… Instead of adding more suburbs to existing town centers, build new ones, make them a sustainable size, and work on providing employment opportunities in those town centers.

Provide more commercial space, that way companies/businesses have more options about where to locate.

Build desirable retirement villages, so that retires will actually chose to leave they’re properties.

And finally, develop a more around the lake, in particular boardwalk style area’s with low density commercial back by high density residential.

In other words, increase supply, lower taxes, and stop assuming building smaller and smaller blocks will solve any problems…

caf caf 10:27 am 29 Oct 07

Yes, which is why the capacity problems in the building industry have to be addressed as well. Otherwise, increasing the land supply will do nothing for house prices.

Kramer Kramer 10:00 am 29 Oct 07

I think if the govt released a significant amount of land, prices would dip slightly before the builders move in for the kill. Again supply & demand – if builders are in short supply the cost of building new houses will skyrocket.

Kramer Kramer 9:56 am 29 Oct 07

The land where Canturf is based just off Dairy Flats road is a flood plain. I’d love to see people build their houses there in the current drought, and then get the suprise of their lives when we next see a significant rainfall.

Lord Mælinar Lord Mælinar 8:47 am 29 Oct 07

The world is returning to the old convention: Nobles who owned the land, and the Serfs who rented it off them. Quit your whingeing and either plot a revolution, or get back to work and farm my potatoes.

jemmy jemmy 8:39 am 29 Oct 07

Some might say I’m speaking too philosophically without practical solutions, so here is how I would fix things:

The main one I see every day is the absolutely huuuge amount of land taken by the turf farm near Fyshwick/airport. Rezone to residential. Pay out the leaseholder, I’m sure the govt would still come out ahead with the sale of residential blocks.

More the exhibition grounds/show grounds and the racetrack 10 km further out. That’s an enormous quantity of land that’s used only part-time only 5km from the city.

I’ve got my point across so will shut up now.

jemmy jemmy 8:27 am 29 Oct 07

I agree completely with Caf.

Special G, you’re describing me, I come from bayside inner Melbourne. Tiny 2 br terrace, $1.4M. Why? No supply, there is no more land. Here, there is plenty of land that is artificially held back from supply.

Perform a thought experiment: you can do a squatter and pay the Crown for any vacant land you find. How would prices in inner Melb change? Not one bit. How would prices here change? Drop by half.

Prices here are artificially high.

platypuspye platypuspye 10:20 pm 28 Oct 07

Is the issue for new home buyers the deposit or the repayments – or both?

nyssa76 nyssa76 9:19 pm 28 Oct 07

boomacat, it may well be ill will but so is ‘laughing’ (not directed at you though) at those who can’t afford to buy a house.

The cost of a house is BS. No one should be made to pay the ridiculous prices that are out there today but they do, all because they want a house.

I, too, want a house, but I am not prepared to pay that much when I can buy a 4br outside the ACT for less than $300,000 and pay off my HECS debt (minor) with the left over amount.

The ACT prices are unrealistic for such a ‘small’ city.

caf, I agree with the releasing of land. Bonython “West” has land for sale but with some of the land sizes, you’ll need to build up and up and up if you want more than 1 room.

caf caf 8:53 pm 28 Oct 07

We live in a market economy, but one in which the Government does regularly make interventions.

It is true that reducing the incentive to purchase and hold investment properties will drive up the cost of rent, so *that’s* not a viable solution.

The only viable solution is to improve the supply situation – which involves both increasing land releases and implementing policies to remove the capacity constraints in the building industry.

boomacat boomacat 8:26 pm 28 Oct 07

It’s a bit rough wishing ill will upon those who have purchased investment properties – you might find Nyssa that many of those individuals are just ordinary working people like you trying to get ahead for their families.

As has been said, if no one owned investment properties, there’d be nowhere to rent. There aint enough places to rent in this town as there is.

We DO NOT live in a centrally controlled economy – we live in a market based economy. You CANNOT expect the government to fix this problem for you. Right or wrong, you are going to have to fix it yourself.

nyssa76 nyssa76 7:07 pm 28 Oct 07

Special G, I’m sure he’d love to be in Iraq….

But in the real world it’s not like that.

Compassion and empathy are no more. It’s all about ‘what can I get for me?’.

I hope the market drops to the point that the price of housing halves. Maybe then all the greedy bastards paying off $450,000 loans will realise just how greedy they were.

Special G Special G 7:00 pm 28 Oct 07

And I even had pizza tonight – I’ll laugh right now though. Centre of Melbourne you get a tiny shoe box 2 bed town house for upwards of $700,000, why? because that’s what people will pay.

Times by people lived with parents while saving for a deposit, or never bought. If you want a cheap house on a big block, get out of Canberra, or any big city, and move to Woomera.

Nyssa – I understand from previous posts your husband is in defence – send him off to Iraq or somewhere for a couple of months and by the place outright. I’ve got single income mates in defence and Police who did exactly that – went overseas on the gravy train, saved their money, and on return bought an apartment/house.

A saying in real estate is ‘Time in, not timing’ – Previous history has shown the real estate market doubles every ten years – In the mid 70’s my parents bought their place for $68,000, at the time stretching their budget completely, large house, large block and at the time in the boonies, Aranda. 30 years on they are cheering and it was payed off along time ago.

What I am saying is wait another 30 years and a standard house in Canberra will be worth over a mil. But hey then again a mil just won’t buy what it used to.

Here’s my advice – buy a house/townhouse/unit that you can afford, sell it in a couple of years or use the equity to buy another place – sit back and laugh into your pizza at all the people whinging about how they can’t afford a house.

Ha Ha Ha

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