If you clicked on any property news articles in 2019, you might have thought it was all doom and gloom.
It’s certainly true that buyers and sellers faced a unique set of challenges in 2019 with prices dropping, or at least stalling, across most of the country. There are also fewer properties on the market than usual for this time of year, with everyone waiting to see what will happen next.
Despite all the challenges, John Minns, Managing Director of Independent, is looking at 2020 through rose-coloured glasses.
“There are so many reasons to feel confident about the Canberra market,” he says. “Buyer confidence is up, interest rates are down, demand is strong and there are new opportunities everywhere.”
He also agrees that 2019 was a complex year, with more than a few challenges.
“Where do we start?” John laughs. “There were fewer properties on the market. Tenants competed for housing, putting major pressure on affordability. Low-wage growth has made it harder for first home buyers to save up a deposit, and if you did decide to try and buy, chances are that you ran up against the restricted lending criteria following the Banking Royal Commission. Last but not least, a few high-profile stories about construction defects saw buyers become wary of off-plan developments. It was a perfect storm of events.”
Luckily, the industry has worked through a lot of them and the market is looking better in 2020.
The market started to rebound in the second half of 2019 and is predicted to get stronger. CoreLogic identified a 1.1 per cent rise in housing values in December, with a 4.0 per cent rise in the final quarter of the year and five months of consistent growth across the country.
Much of the growth has come from Sydney and Melbourne which has started to reverse steep declines. Canberra, by contrast, has been a steady performer. Together with Hobart, Canberra bucked the national trend in 2018 to post a 4 per cent gain in house prices and displayed slow but consistent growth throughout 2019.
“For a reliable investment, you can’t go past Canberra,” John says. “Investors are coming back into the market around the country and there are few better places than Canberra right now. With interest rates as low as 3 per cent, and rental returns at around 6 per cent, you might be surprised at how affordable an investment property really is. And with vacancy rates at historic lows, your purchase will also contribute to solving the affordability crisis in Canberra.”
Selling a home? The timing couldn’t be better.
“The supply of established residential properties is really low, making it a seller’s market,” John explains. “If you’re waiting for the right time to upgrade or move, you can take advantage of the undersupplied market to command the right sale price.”
If you do decide to buy, fear not. The initial overreaction by lenders has eased off and borrowers are welcome once more.
“APRA has loosened the requirement that banks have to prove borrowers could meet a 7 per cent interest rate,” explains John. “Now, it’s 2 per cent over the actual interest rates. With those rates at record lows, it could mean a big difference in borrowing capacity.”
Would-be buyers are also responding to a relatively stable political environment. Canberra voters might be going to the polls in October, but the Federal election is firmly in the rearview mirror.
“Regardless of your political leanings, the negative talk around property at the last election was a drain on confidence,” John says. “Now that we have a more consistent bipartisan approach. It’s fairly safe to assume that current policies will remain in place for some time. That means that you can make decisions about buying or selling property with greater confidence.”
As for those off-plan developments, builders are carving themselves a new opportunity.
“Developers with great reputations have become the sought-after suppliers of apartments. Off-plan developers are responding to buyer demand by backing their developments with longer warranties and great track records in quality and product. As more buyers look for location, lifestyle and amenities over the traditional quarter-acre block, high-quality apartments are offering more choice than ever before.”