Sky-high house prices will transform the capital

Ian Bushnell 30 July 2021 16
Aerial View, Drone, Weston Creek, Houses

Soaring house prices in established suburbs are changing the demographics of Canberra. Photos: Region Media.

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.


READ MORE: Why it’s harder – and dearer – to get a house in the ACT


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.

Units

Units are offering a cheaper entry into the market.

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.


READ ALSO: Great wineries right on the doorstep? Yass!


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.


What's Your Opinion?


Please login to post your comments, or connect with
16 Responses to Sky-high house prices will transform the capital
Filter
Order
HiddenDragon HiddenDragon 8:03 pm 02 Aug 21

“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.”

That point would be more reassuring to Canberra’s property barons and baronesses if it weren’t for the fact that much of that government involvement will come from sub-national governments and from the regional networks of federal agencies, and it will all be done with the most challenging fiscal circumstances for decades.

The most recent broadly comparable experience to the fiscal problems facing future federal governments would be the early 1980s, which produced the Hawke-Keating government – certainly no friend of Canberra when it came to spending on public sector wages or infrastructure in this town, because its priorities were elsewhere.

If that bit of history is any sort of guide, people who think that an Albanese government (which will have an awful lot of expectations to meet around the country, with a very bare budget cupboard), will keep things humming along in Canberra, may be in for a very sobering experience.

Nick Swain Nick Swain 1:52 pm 02 Aug 21

Larger apartments such as found in many European cities are also in very short supply. For downsizers, who wants to swap a large house for a poorly designed and built shoebox? The current tick-a-box building codes do little to encourage good building design including place-making. Older folk might move out of larger houses if there were better designed, larger apartments in good open-space settings.

    Capital Retro Capital Retro 5:17 pm 02 Aug 21

    There is absolutely no incentive for people to downsize. The ideal requirement for downsizing seniors is a single level town house so, what are developers building?

    A few with 3 or 4 levels. Totally useless.

bj_ACT bj_ACT 11:32 am 02 Aug 21

“The Barr Government stamp duty reforms will assist homebuyers in the lower end of the market”.

It’s NO good reducing stamp duty on lower end properties by $20k, when the ACT Governments land development and housing strategy has ‘helped’ add $200k to the price of the 3 beddie outer suburban house.

ACT Labor and Greens adopt buzz words and academic theories on housing affordability that sound great to Joe Public and fit with the views of tax efficiency modellers and economic rationalists.

But in the real world, they don’t deliver on the promised goals or on housing affordability in Canberra.

Paradoxically, in many cities and towns, increasing housing density has led to higher housing prices, due to unanticipated secondary effects.

cockneyreject cockneyreject 10:55 am 02 Aug 21

This is terrible news for young people. We need politicians who are capable of thinking outside the box, which means bypassing the developers and the greens and getting creative. We’ll be rightly dammed by future generations if we leave them with cramped and financially crippled lives.

    Sam Oak Sam Oak 11:38 am 02 Aug 21

    Creative how? Levelling black mountain and namadgi to create more supply of land? Bring in foreign labourers on special visas and subsidise the building industry to lower the cost of construction? Anyone that thinks it’s easy to create affordable housing lives in the land of the fairies. Most young people I know are quite well off in Canberra working in APS jobs. They should have no business getting their foot onto the housing market yet I see plenty in their mid 20s buying new houses in the outer suburbs. If that isn’t well off then I don’t know what is!

    cockneyreject cockneyreject 2:43 pm 02 Aug 21

    We can’t assume Australia’s taxpayers will be prepared to subsidise Canberra with high salaries forever. Canberra will normalise. But IMO that doesn’t mean we have to bow to the wishes of our supposed betters and lower our standard of living. No, I wouldn’t want to level Black Mountain, given the abundance of orchid varieties in spring it’s worth preserving. My Ainslie, well, maybe. In sny case straw man propositions are pointless.

    Maya123 Maya123 10:44 pm 02 Aug 21

    cockneyreject wrote, “But IMO that doesn’t mean we have to bow to the wishes of our supposed betters and lower our standard of living”

    That can be a problem. Some home buyers not being willing to drop the standards they have become accustomed to. Likely their parents home, which is possibly not their parents’ first home, the standard of which they worked up to, by moving on from their first home, or upgrading it. The house or flat/apartment first home-buyers buy does not need to be the forever home. It’s only a step on the property home ladder. Writing comments such as you did, comes across as stuck up spoilt.

    It was easier in my day to buy a house, but still I was on less than average wage and I had to buy the cheapest house on the market in the whole of Canberra, and I barely could afford that. I rented out the spare bedrooms so I could. Otherwise it would have been a cheap shabby flat (rather like the old brick ones in Queanbeyan). People told me not to buy there, they wouldn’t dream of buying there (crime rate), but I did. The standard of the house was certainly not what I was used to (no plumbed hot water; only plumbed cold, was one feature), but I was not so spoiled that I wouldn’t consider it as a first home, and so bought it. I was lucky to have an inside toilet, as some of the neighbourhood houses there, didn’t. I have since moved on to a very nice house. That original house gave me the capital to do this.
    A first home need not be the forever home. Buy to get into the market, then later, buy something better.

    assiduous assiduous 4:43 pm 24 Aug 21

    There’s always someone ready to complain a task is too hard isn’t there Sam. The cost of property is largely a function of credit availability. If young people are offered a 40 year mortgage, to pay for overpriced real estate at emergency record low interest rates it doesn’t make it a good deal, it makes them debt slaves in a ponzi economy.

JessP JessP 10:21 am 02 Aug 21

The land ballots in Ginninderry, meant to occur in June/July have also mysteriously not happened. Ginninderry also has a low income/first home owner (Flexi) ballot that was meant to happen in June that just hasn’t occurred, and no information coming from the Ginninderry reps. I guess they didn’t say which June it has happening….. The sad thing is that the developer is in partnership with the ACT Government. So a ploy to increase the prices?? Sadly it feels that way.

Sam Oak Sam Oak 8:27 am 02 Aug 21

I wouldn’t say the price of land in the ACT has risen that much in the past year. The houses I seen sell for above the reserve are all newer houses with renovations so would say it’s the cost of construction that’s gone up. I’ve seen derelict houses in Braddon, Ainslie, Turner, etc. passed in at auction because of the lack of builders in Canberra. Those locations and proximity to the CBD would be quickly snapped up in Sydney and Melbourne but with the lack of developers no one would touch them with a ten foot pole in Canberra.

    Sam Oak Sam Oak 9:33 am 02 Aug 21

    What’s more, the factor a lot fail to recognise is while house prices have risen by 22% since the pandemic started, the money supply has increased 30% due to quantitative easing by the RBA. That’s to pay for jobkeeper and the disaster payments. Those asking for cheap housing are those who’s jobs were saved by government stimulus. To see house prices fall we’d need to withdraw those stimulus measures and get unemployment up to 20% so be careful what you wish for. You can’t have free money and expect free housing as well!

    Oiledpengu Oiledpengu 12:49 pm 02 Aug 21

    Little touches by the ACT government such as making all new builds disability access friendly don’t help. These little additions cost thousands on a new build

    bj_ACT bj_ACT 3:35 pm 02 Aug 21

    I’m surprised you don’t think the price of land has risen much in the last year. One half of a sub divided block near me sold for $200k more than the identical half just over a year ago.

    Construction mates say that their paying heaps more for land in Canberra then they did pre Covid.

Stephen Saunders Stephen Saunders 8:14 am 02 Aug 21

Or, in crude terms, “Geocon Rules, OK”. With mass migration set to resume ASAP, you can shut the gate on housing affordability for another generation. As a consolation, amenity wise, Melbourne and Sydney will continue to cop it worse than Canberra.

Acton Acton 7:11 am 02 Aug 21

The ACT government wants higher land prices because higher average unimproved values (AUV) is the key factor determining higher rates revenue. Higher land prices means higher rates, higher house prices and less affordable housing for everyone, particularly the young.

CBR Tweets

Sign up to our newsletter

 Top
Region Group Pty Ltd

Search across the site