30 July 2021

Why it's harder - and dearer - to get a house in the ACT

| Ian Bushnell
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Grand Central Towers Geocon Woden

Grand Central Towers in Woden under construction last year. Five times the number of units have been built than houses over the past decade. Photo: Michelle Kroll.

Canberra now has the biggest gap between the price of a standalone house and a unit in the country.

The latest data from CoreLogic shows the differential is 74.8 per cent, way ahead of Sydney at 54.2 per cent.

Since the onset of the pandemic, the Canberra Home Value Index increased 22.7 per cent across houses, compared with just 8.7 per cent across units.

That won’t be news to Canberra homebuyers who have had to adjust their expectations as they search in vain for a standalone house they can afford.

Many have given up the hunt for that house on a block, no matter how small, and opted for the more affordable and prevalent unit or townhouse.

While the pandemic has fed demand for lower density property, Canberra’s construction boom and government policy have also skewed the market, with nearly five times the number of units built over the past decade than houses.

CoreLogic says that for the 10 years to March 2021, there were an average of 4,593 units under construction each quarter compared to just 841 houses.

This equates to roughly 5.5 units supplied to the market for each house construction, relative to the national average of 2.0 units for each house over the decade.

“This strong uplift in unit supply has left unit price growth relatively subdued,” CoreLogic says.

The June median house price in Canberra was nearly $880,000, while units averaged about $500,000.

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New estates continue to be developed in Gungahlin and the Molonglo Valley, but government policy is that 70 per cent of new housing be in infill areas to curb urban sprawl and preserve the environment, and is therefore more likely to be unit development.

CoreLogic says that over the past 15 years, June 2021 marks the biggest gap between median house and unit values across Sydney, Melbourne, Brisbane, Adelaide, and Canberra.

But as higher levels of vaccination pave the way for safer high-density living and buyers baulk at the sheer expense of detached housing, there may be more demand for unit stock in the years ahead, which would narrow the price gap between the two stock types, CoreLogic says.

That would only lock out even more people from Canberra’s pricey market and squeeze the national capital’s tight rental market even further.

The government is committed to building more public and social housing to help those on fixed and lower incomes keep a roof over their heads, but welfare groups insist it won’t be enough, citing a 3,000 dwelling shortfall in the ACT.

CoreLogic’s next home values report is due out on Monday (2 August) and is likely to show yet another jump in prices.

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Would I be right in saying that the government’s policy (or at least its actual impact) is to price people out of the house market and ‘encourage’ them to ‘choose’ high density apartments? Other effects are to reduce housing choice and create a bigger wealth divide between house owners and apartment owners.

ChrisinTurner2:19 pm 31 Jul 21

Is a town-house an apartment or a house?

The big difference between houses and apartments is the land. If you have control over the land your dwelling is on, then it is likely to classified as a house.

Every time the government tries to make housing affordable or rent cheaper it does the exact opposite. Please just leave it alone

Because ACT Labor/Greens housing strategies are simply buzz words and motherhood statements NOT concrete actions to implement effective housing solutions that suit Canberra at either the spatial or social level.

If I hear another ACT Minister in the media say that they’re creating more activated housing options for homebuyers, increasing choices for modern living or your Government is facilitating innovative housing design and generating alternative delivery mechanisms.

There is a simple reason why there are 5 times the amount of units being built than houses. Firstly the government is not listening to what the public really wants and they are making a lot more money in rates. Unfortunately this government thinks that everyone wants to “live in little boxes on the hillside made of ticky tacky.”

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

(1) “5.5 units supplied to the market for each house construction, relative to the national average of 2.0 units for each house over the decade.”

This means the supply of houses has been reduced in Canberra, more so than in any other state or territory, resulting in higher house demand and house prices.

(2) “…government policy is that 70 per cent of new housing be in infill areas”

Infill areas are in existing suburbs where land prices are higher, which means housing costs and housing prices will be higher.

The Greens/Labor Government policy to build more apartments than houses in more expensive areas means housing affordability has declined, making it harder for low income, single income and first home buyers to obtain their own home.

Why is it harder – and dearer – to get a house in the ACT?

Simple answer – Because you voted Greens/Labor.

(And rates have gone up by another 9% from last year)

utter nonsense. you think that house prices would be lower under a liberal government????? do you really think it is a sensible policy to keep expanding canberra further and further outwards, with longer and longer commutes?

House prices are going up because interest rates are extremely low, and not that many people are selling – its happening across the country not just in Canberra so quite how it can be blamed on the ACT Government is beyond me

Yes, the ACT Government is entirely to blame for its own unique policies that are designed to push more and more people into smaller and small spaces, paying higher and higher prices.

Any government, Labor or Liberal, with these policies would have the same effect, but the fact is that it is ACT Greens/Labor doing it.
House prices would go down if more land was released for building so that a greater supply of affordable houses in affordable suburbs came onto the market. Traditionally, young couples bought their 3 bedroom first home in a new outer suburb, but for some reason young couples with aspirations for a family and home ownership are not a priority for Greens/Labor.

I’m not sure about the politics but the rates increase is supposed to eventually replace stamp duty. The idea is to reduce to the barrier to purchasing a new property and make it easier for first home buyers to get into the market. Those who already bought a home (and paid the stamp duty!) might feel a bit peeved because it feels like they are getting hit with more taxes… but in the long run the intention is to make it easier for people to buy their first home.

It’s also harder due to the treatment of housing as a financial asset. Houses cost what people are allowed to borrow, and people are offered huge mortgages these days to buy property which i view as a modern form of slavery. This is in the interests of sellers, not current buyers who transfer large sums to the banking system government and the seller. The second order impact of this is to hollow out the economy, increase inequality, and undermine the inter generational social contract.

Sadly, many of the multi unit dwellings that are common now in areas like Gungahlin and Molonglo are also hot spots for anti social behaviour and crime which leads to police attendance. When ACT Housing decided to sell off the land on Northbourne Ave and move the tenants, they apparently tried to salt and pepper the tenants in the community. It appears they were not overly successful due to the fact that a large majority of these tenants were moved into multi unit dwellings again.

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