ACT Buy in Canberra - No growth in apartments

Hi all,

I'm moving to Canberra and want to find a place. Renting a room in a sharehouse is pricing between $200-300 (per week without bills) for a decent modern-looking place. To me it's insane and buying 2 bedder's might be a way.

I have two questions

1) Is it true that Canberra apartments (especially 2 bedrooms) have not shown any growth in the last 10 years. They all appear to be very flat on sqmresearch.com.au.

2) Can anyone recommend places to buy an apartment? I've been looking around west Canberra; Woden/Weston. They're not too far from the centre compared to Tuggeranong. Prices appear decent compared in Inner North/South of Canberra.

 

1) I would say most apartments have not shown growth over the past 10 years. Oversupply have sent some backwards. I would say 2 bed, 2 baths have held up the best.

2) You need to do some research on developments coming. It is hard to find apartment locations that don't suffer from oversupply or poor quality.

Considering the cost of rent in Canberra I can see merit in buying an apartment, particularly if you could get a 2 bed and rent out the spare room/carspace. Ultimately it is houses that move in Canberra.

Good luck!

 

Apartments in Braddon have held there value and many have risen the past 12 months, especially 2 or 3 bed, 2 bath. I think they will either hold value or rise slowly the next 5 years and rental yields are good but land tax and strata are high if you are purely investing.
But if you want somewhere to live that could be cheaper than renting then take a look at the Flemington road strip through Harrison/Franklin and to Gungahlin. You won't be getting any capital growth i doubt over the next few years (won't go backwards though) and if you were to buy at $280k and interest only @4% that would be $220/week and P and I over 30 years @4% you are $315/week. You have the new light rail completed in 12 months and Gungahlin town centre expanding all the time. 20 mins to the city on the light rail. You can shop around in Gungahlin and negotiate hard as there are plenty for sale. Get something close to Franklin shops or walking distance to Gungahlin town centre for the long term.

 

If you want to buy an apartment, I'd probably stick to inner south and get one that is really spacious. I have found ones in Barton and surrounds seem to hold value well. Kingston is good but there is massive supply - you need to pick the best of the best. The ones with really spacious living areas and good sized bedrooms and outdoor areas do well. Unfortunately, they are not cheap so it kind of defeats the purpose. I wouldn't buy a stock standard two bedder with tiny bedrooms and the like and I wouldn't buy one that wasn't in or close to a built up walkable area with lots of ameneties. You might as well buy a house in these locations.

 

what about getting a townhouse? their pricing is almost the same with some luxury apartment but you get more spacious place. and you get some land. From investment perspective do you think it has a better capital growth than apartment?

 

Again, it depends on the location. If you can't afford a good location, I'd stick to a house in areas like central Belconnen that are more affordable and have been getting good CG

 

Got a townhouse (3b, 2living area, garage) in Moncrieff, location wise less than 2 mins walking distance to Taylor school (to be complete in 2019),then about 50 meter distance to Moncrieff shops when it is complete, aside that light rail to commence in 2019 and more development work happening in Gungahlin area.

 

Unless you know Canberra I would rent for a short while to get your bearings.

Many people who bought new are under water so there is a real danger. Given the essentially unlimited development going on, capital gain is a very long term play for apartments IMHO.

Personally I would buy a house in a suburb with gentrified local shops ( unless you are really want an apartment in a specific area where you can't afford a house).

You can then rent out a room and flip the equation

 

If you're looking at decent 2BR units in Weston I'm guessing you're aiming at the $400k - $500k bracket for budget; is that right?

If that's the case why not buy a house in Richardson or Charnwood?
That way you'll most likely get a good whack of capital growth.

 

BA Claire Corby from Capital Buyers Agency knows her territory inside out if you are looking for help in Canberra Members | Real Estate Buyers Agents Association of Australia (REBAA) Inc
Best of luck with your impending purchase

 

I know Claire above - she's done some great work for my clients.

I wouldn't bother with apartments/townhouses in Canberra. There's been bugger all growth of late - and I can't see it improving anytime soon. If you're looking to purchase - I'd seriously consider buying a house.

Body corps can be a huge pain too - and can also be quite expensive!

Cheers

Jamie

 

I'll refrain from saying of what I think of many of the housing/apartment developments in Canberra. However, by saying that you will already know what I think, so may as well go for it.

Many soulless and poor quality builds. Been in a couple of units at Kingston Foreshore. Gawd, they are awful. Expensive but awful. In less than five years ripping walls out to try and find where the water leaks are. Some are costing owner occupiers $250 a week in fees simply to live there.

And hope if you buy a stand alone property in the newer 'burbs you can check the foundations to see if they haven't removed the reo before the concrete pour. And in one, the asbestos landfill dump is less than 100 meters away.

 

even close to amenities consider bad purchase too?

 

I think most apartment units are reasonably close to amenities. I still wouldn't bother personally. The growth has been terrible and there's still over supply.

Cheers

Jamie

 

I think given the choice of renting vs buying apartment I would rent. Save your money, invest a bit in other safe asset classes and buy a house when you are ready. The advice to get your bearings before you buy is important. I have seen many Sydney or Melbourne people come to Canberra buy 25-30 mins from town thinking compared to Sydney that is great. Truth is in Canberra if anything is 20 minutes away people will not go there and they end up socially isolated with poor public transport infrastructure.

 

I was thinking the same thing - let's just say that the building standards are not ideal. I'd be okay with a 10 yo+ block where the issues are on the table or sorted or maybe something small and boutique. There are lot of blocks with major issues and many that are poorly maintained. Need to look at the history of the building.

 

Thanks all, it's given me some clarity.

It sounds like that the safest option is to buy land 20mins out and then get a reputable builder so I can inspect quality.

However I think a budget of 500k won't cut it.

 

Building is very expensive in Canberra. If you can up your budget to the high 500s (600k is better) you'll be able to buy a nice established house in Belconnen with good CG potential

 

I believe you can still buy 2 bedrooms 2 bathrooms apartments for $350+, you just need to keep an eye out! It really depends on what your goals are, whether you want to invest or just rent out a room or something. Canberra has got low vacancies for a reason - the land tax sucks, population increases and slow land release and it almost makes no sense for a new investor unless you're happy to be bleeding a fair bit for the CG?

Overall, I see Canberra continue to grow in 2018 with the amount of construction and jobs happening there to be either the 2nd or third best state! Apartments like elsewhere in the state will always be behind houses but always desirable closer to the city with the low vacancies experienced, make sure its a unique one.

 

I don't think apartments in the 350k range are worth buying. I know a few people who've got negative equity from getting apartments around this range. I would stick to ones that are like 90-100sqm but they are often the same price as a house so it's pointless