Sky-high house prices will transform the capital

Another month, another median house price record. And median unit price record, for that matter.

But it’s the former that matters because it, along with the ACT Government’s 70 per cent infill policy, is driving a change to the way many of us will put a roof over our heads.

CoreLogic, which will release its monthly home values index today (2 August), revealed last week that Canberra, where house prices have soared 22 per cent since the pandemic started, has the biggest gap between the median house price and median unit price in the country.

It also said that there had been 5.5 times the number of units delivered in the ACT over the past decade than houses.

It’s an apartment construction boom, helped along by the government’s policy limiting the amount of greenfield stand-alone housing in favour of higher density development in the town centres, certain new areas such as the Molonglo Valley and infill areas.

Multi-storey apartments will eventually line the Northbourne light rail corridor, and when the tram heads south, vacant land such as the current Curtin horse paddocks will be turned over to housing.

What the southern corridor will look like is still unclear, but one can expect high density close to the Woden Town Centre and near established centres such as the Curtin shops, and at least medium density elsewhere.

A just-commissioned study will give more of an indication of what may happen.

The point is the construction of high to medium-density housing will continue to outpace that of stand-alone homes. With those prices going stratospheric, more of us will be calling units and townhouses home.

With demand high and supply low, houses across Canberra will be out of reach for many, including young families who will face a choice between renting where they want or opting for the cheaper and probably less appealing path of a unit or townhouse development in an area they can afford.

The market needs to respond to this shift by providing bigger and more spacious apartments and townhouses. At present, there are too many one and two-bedroom properties and not enough three or four-bedroom ones.

Designs will have to become smarter and more attention paid to facilities, services, and green spaces.

Some might say the government should simply release more land, but it has good reasons to curb urban sprawl and the cost of developing and connecting new suburbs can be prohibitive.

It has enough trouble maintaining a public transport system across the far-flung districts of the ACT as it is.

And it is not about to embark on new ventures until Gungahlin and Molonglo are complete.

What it will face, though, is pressure to increase its public and social housing commitment as more Canberrans fall foul of the ACT’s nation-topping rents and tighter-than-ever rental market as buyers become renters.

It will also look to encourage multi-storey build-to-rent developments to boost rental stock.

Now that Federal Labor has run up the white flag on changing the tax treatment of property to influence prices, the emphasis, if it sneaks back into office, will boost the supply of social housing for those locked out, and that won’t be single dwellings.

The Barr Government will be hoping that its stamp duty reforms will assist homebuyers in the lower end of the market and encourage the turnover of properties in increasingly out-of-reach established areas.

But the horse has well and truly bolted when it comes to house prices. Two decades of tax gifts to investors, an immigration policy designed to stimulate demand and drive growth and now low-interest rates mean new base levels have been set and, short of a correction nobody really wants, they are here to stay.

Ironically, the pandemic has only increased the fervour for bricks and mortar as people who can’t spend their money on things such as travel pour into the market to take advantage of ultra-low interest rates.

And the demand has been for low density and the regions, not the compact city model Canberra is pursuing.

In the ACT, only a public service cleanout would make a dent on the market, and that is hardly going to happen when government is going to have to play a bigger part in our lives, whether we like it or not.

So whether you are buying or renting, the future is looking up, literally.