ACT Canberra unit oversupply affecting houses ?

Just wondering whether you think looming oversupply of units in Canberra likely to affect house price there ?
Was just surprised that one lender has reduced maximum leverage for purchases in Act, Wa and units in vic. I don't understand why they consider Act higher risk other than the unit oversupply ?

 

No, I don't think so. Houses are doing quite well in Canberra at the moment

 

Nope - the oversupply has been around for years.

As mentioned above - houses continue to perform strongly. There seems to have been another boost to prices since Christmas. I know Downer just recorded it's first $1m sale - no doubt more will follow shortly.

Cheers

Jamie

 

Thanks ! I was pretty sure House prices were doing well, I just couldn't understand why this lender had this leverage reduction on houses and units.

 

Hi Canberra experts. Any opinions about Dunlop ACT? I am thinking to invest around 500K in ACT and Dunlop / surrounding areas seem to have quite a few sold in that price range.

 

I would look around Page/Florey/Scullin and surrounds. A lot more central and higher rental demand IMO

 

Agreed. Come closer in - the suburbs Cimbom listed would make for better Belco investments IMO.

On a side note - I don't keep an eye on the entire ACT market (Dunlop might be doing ok - I'm not sure) but where I'm looking (inner North) it's still going crazy! Last weekends auction results were nuts - Downer recorded another $1m+ purchase

Clients are reporting frenzies at open houses in the Inner South as well (one open had 70+ in attendance) - and buyers paying over asking price in Tuggers and Belco.

Looks like there's been a significant jump this Autumn. Anyone else noticing the same?

Cheers

Jamie

 

yeh i agree with the above, apartments are not impacting house prices. They are impacting rents though, if it wasn't for apartments i think there would be rental bidding like in 2005 was it?

and also agree avoid dunlop and come closer in. i used to be Page's biggest fan boy, though now im on the evatt bandwagon (in terms of value for money), due to closeness to the more expensive north, in line with Jamie's comments. havent been attending too many opens though.

Keen to see the mr fluffy land sale prices. 7 blocks in evatt are up on 23rd..hoping to attend. see how it compares to the over priced Lawson

 

Agree with the above that if you can afford to buy closer do so. However, I don't mind Dunlop if that is all you can afford. You can buy a pretty good 4 bedroom house for $550K in Dunlop which might not be possible in the closer suburbs. And it really is not that far from Florey, Scullin etc.

But if you have the dough, go closer.

 

value for 3 storey walk ups still ok?

 

hey guys(@Jamie Moore, @S1mon, @Cimbom), I am looking at investing in Canberra for my next purchase. my budget it at the 600k mark. Cimbom has mentioned Page/Florey/Scullin are good locations for investment. For similar price point, I wonder how it would compare with suburbs around the Tuggeranong suburbs such as Wanniassa/ Kambah/Monash area in terms of service, schools and conveniences? Which of those areas would better potential?

 

For an IP or an owner occ?

Throw Fadden into the mix for your Tugerranong suburbs. You might get an entry level property there for $600k - it's prob the nicest suburb in Tuggers.

Cheers

Jamie

 

dont know a lot about tuggers. not a big fan, always seems dead. but has a fair bit of public service so can't be too bad? at least those suburbs are the right side of tuggers (no offence to those that own further out). Im also bias given where I live/have an IP.
but i genuinly think belconnen offers better services , conveniences . closer to the city. more in demand etc. 2 new hospitals to open soon. lots more public servants.

I like those belconnen suburbs cimbomb mentioned too . got a suburb email from real estate com au last night, said the Page median has gone from 490k twelve months ago, to 592k now..
looks like the belconnen suburbs have had a bit more growth over the last 10 years. was going to suggest warramanga but looks like its done well the last year / above the 600k now - just that its closer to the a lot more expensive suburbs in woden. something like this woulda be good imo

550k in belco can get you something decent imo. keep in mind renoes are a lot more expensive here should it need any work.

but maybe its time for kambah to shine?

 

thanks @S1mon, We planing to purchase it using SMSF. For us to borrow 600k, the bank requires the rent to be $500 pw in order to borrow enough. It is also complicated when it comes fundig reno, so we need something in a relatively good condition. Lot more constrain to work with when it comes to SMSF... any recommendations for newish suburbs with decent infrastructure and convenience ?

 

New suburbs + $600k pretty much leaves you with Gunghalin suburbs. Not a bad option but I'm not sure how it will go longer term.

 

I still see some value in Higgins and Holt. Page, Scullin, Florey have had a good run, maybe a bit better run than Holt and Higgins. I would go for Belconnen ahead of Tuggeranong. Closer to CBD and Gungahlin and Belconnen town centres. Closer to Barton Highway and Federal highway for quicker access to Sydney/Melbourne. More infrastructure happening on Northside than Tuggers. Better demographic in Belconnen and Gungahlin, younger families moving into Belconnen and renovating older houses.

 

Honestly I think it's going to start affecting houses, though not necessarily in well selected suburbs.

Some areas e.g. Kaleen, Chifley, Ainslie etc have seen real strength because families want to move into these popular areas. Other previously popular areas like Watson, Harrison etc I think will start to come under serious price pressure, due to a very strong over-development of apartments and units. Families are very much drawn by school trends, it's one of the most easily measurable benchmarks of a "good area", and when people look to choose a suburb the quality of schools is a big factor during the time when young families buy or rent. I personally think this is a huge driver of Canberran suburbs because with the exception of outer fringe suburbs everything is really very close to everything else, meaning distance is rarely a big deciding issue.

An oversupply of apartments and units can bring the socio-economic profile of a suburb down pretty quickly, and also tends to also being things like NAPLAN scores down. Young families looking for homes to settle in long term then become picky over that location. Canberra is very big for gentrification and de-gentrification. Tuggeranong for example saw a big de-gentrification as young families moved away. Gungahlin has been through a sharp gentrification phase but this is now being eroded as the addition of multiple apartments will bring some suburbs down suburb popularity.

I personally think that much of Gungahlin will start to see an eventual slow decline as Tuggeranong did. Much of it has been overbuilt, with too many ugly, crappy units and flats, which will slowly bring down the popularity. The area will also come down as people age (we might see the opposite in say Tuggeranong or Woden as these areas will likely have more retirees selling up, which will slowly attract more young families and will likely generate interest over time). Not all suburbs in Gungahlin, by any means, but probably some of the central ones.

As with all cities, fringe suburbs could become a big problem. If you look at areas like Molonglo and Moncrieff, sales are unimpressive. Other areas like Fairley in Murrumbateman I think will also be a risk. If the market stalls, country areas often become less popular and people might be choosing them right now only because they're cheaper.

Another thing to consider with Canberra is it's very much affected by political swings. The recent mini-slump was driven I think by the changeover in government and the public service hiring freeze. Right now, more jobs going means more demand, but that could and probably will wax and wane, perhaps unpredictably. I think Canberra is definitely a long term game, but choose tightly-held suburbs with a good socio-economic profile and lots of competition from young families.

 

The Fadden side of Wanniassa (up high) is also nice and many have broader view/outlook.

 

Thanks

I also think Fadden is one of the nicer suburbs as I happened to live there for about 1 1/2 years about 8 years ago. It quite hilly and got the nice valley feel to it. I lived in various Canberra suburbs for 4 years from 2006 to the end of 2009. I haven't thought of investing in Canberra until recently, but hopefully I am not too late to the party. it seem like there's 20% over all gain since the last peak so looks like things are just starting to happen. Given that Canberra has the highest income out of all the Australian cities, I think there's lots of room for improvement if government is not cutting funding drastically.

 

Agreed.

Housing in Canberra is relatively affordable compared to other cities IMO. A lot of borrowers are dual income earning decent money - and you'll get a decent house from $500k+

Cheers

Jamie