Hi all, Lets start the discussion about Canberra. Is it a sleeping housing giant? What do people think about Canberra and its potential in the apartment/housing market? Has anyone invested into Canberra recently or thought about it, and why/why not? Open to other questions too.
Way too much oversupply and poor capital growth potential. Houses are a much better choice in that regard
Fair enough. How is it a good investment if there is a oversupply and poor capital growth? IMO - seems to me that the market is demanding apartments in Canberra due to the population growth and investment in infrastructure.
Probably not - it’s a reaosnably consistent performer though. There’s an oversupply of apartments - it’s been the case for a long time and will continue for much longer. For that reason - growth isn’t that flash. Houses are generally a better purchase. If investing - keep in mind that land tax and rates are both payable. If it’s an apartment you’ll also cop body corp fees. The three combined can quickly reduce yields. Cheers Jamie
@Want2RetireYoung - check out this thread on Canberra. Canberra IP suburbs and whole market trends in ACT [ACT] Canberra had 5 years of capital growth for detached houses, peaked about a year ago, and prices have dropped 2% the past 12 months. Apartment values have gone sideways/downwards a little for some areas for this whole period and you could probably add another few years prior to that as well. There is an oversupply, heaps in the pipeline and supply outstrips the demand for apartments in Canberra currently. Just one company, Geocon, would have a couple of thousand apartments on the market or being built right now. Long term houses will continue to grow but IMO i expect a sideways market for the at least a couple more years. If you buy in Canberra as Jamie said, do your numbers because rates and land tax are very high.
Nope. Absolutely disagree. The market isn't demanding apartments. The market is such that people are being priced out of houses and forced into apartments. Canberra is good for capital gains. But it is not as attractive a place to invest for myself anymore due to the ever increasing rates and land tax. The numbers would really have to stack up to entice me. Especially as I don't just chase capital gains, I also want good rental yield. I mean, vacancy rates are low, and rents are reasonably high, but prices are high, as are holding costs. So it needs to balance. I don't buy units as a general rule unless I can own the entire set and avoid body corps. About 4+ months ago I looked at a unit here in Canberra. 18% gross yield! The only reason I even looked twice. The problem is, that once I actually ran all the numbers, it just didn't make sense anymore. Without having any mortgage at all, the ongoing holding costs (body corp, rates, land tax, pm fees, etc) were going to eat up 56% of the gross rental income. And that's assuming zero vacancy. By the time you added a mortgage, the unit was very negatively geared. That's appalling when you have such a large gross rental yield. And the unit was actually losing value over the past two years. Plus a heap of new units were being built nearby, so not a heap of prospective capital gains in the future.
I'm also looking to buy over the next 12-24 months (albeit, a family home). I'd want to see what direction the Federal Government takes with regards to public servant head-counts before deciding!
Thanks for all the responses and sharing of knowledge. I definitely learnt from this, and hope everyone else did too.
Agree with the above. Avoid apartments at all costs. There is a lot of information on dodgey builders and defects here (Canberra apartments with building defects : canberra). The land tax issue makes it pretty silly to go into apartments here with no prospects for capital growth and poor yields. I feel good about houses long term in Canberra, but get as close to the centre as possible. There is scarcity for quality houses on medium-large size blocks in established suburbs.
Many things to be said, but the most important of them all is: Canberra has a vacancy rate of 0.6%, and there is a reason for that.
High land taxes and rates discourage investors = limited rental stock & tight vacancy with higher rents.
