This year has been a rollercoaster in all aspects of life - from job security to home-schooling, and even grocery shopping. As subsequent waves and hotspots of COVID-19 emerge in numerous cities and regional areas, in Canberra we count our blessings every day there are no new cases. Despite the changes implemented to the property purchasing process, with socially distanced inspections, as well as auctions conducted via phone or online, the Canberra property market has remained buoyant. Amid the chaos, Canberra appears to be protected within its own little bubble.
“The coronavirus pandemic has had little impact on the Canberra property market after new data revealed the capital bucked the downward trend seen in other capital cities, with the strongest quarterly growth and a record median house price of more than $800,000…While most capital cities saw house prices fall in the June quarter, Canberra, Hobart and Adelaide were whistling a different tune,” says Jessica Taulaga in a recent All Homes article.
The proof is in the numbers. Domain’s June 2020 House Price Report reveals Canberra’s house prices rose by 4.1 per cent over the June quarter. Compared to other capital cities such as Melbourne (down 3.5 per cent) and Sydney (down 2 per cent) over the same quarter, Canberra experienced the strongest growth. There are a few key influences supporting this growth. Here are the main reasons why Canberra is still one of the best places in Australia to purchase an investment property:
Despite COVID-19, most public service employees have been protected by job security. Public service employment has always been one of the main reasons property prices have increased steadily and not slowed as they have in other cities, and this continues throughout the COVID-19 Pandemic. Many people are attracted to Canberra by employment in the Public Service sector, or in companies supporting Government Departments. They often rent when they first arrive in the city, purchasing once deciding to remain in Canberra long-term. Public servants drawn to Canberra for work are ideal for investors seeking high-quality tenants who are capable of servicing the rent and looking after a property. Provided the landlord takes care of these tenants, they will often stay longer than originally intended, making excellent tenants for a number of years.
Our aging population ensures there will always be a proportion of property turn-over due to “downsizing”. In Canberra, many original residents purchased new properties during the 1970s, in the northside suburbs surrounding Belconnen, for example. Many of these residents are now in the 60+ age group and considering downsizing from their large 4-bedroom house on a substantial block to a more manageable sized property, which also gives them extra cash in the bank. These established houses have often been well maintained and with a little modernising are an excellent investment.
The Government has recognised our economy and property market need a boost during these uncertain times, so there are a number of financial benefits, including low interest rates, and Government incentive schemes such as Home Builder grants and stamp duty waivers on land and purchasing off the plan to stimulate the property market.
Demand for rental properties
Canberra’s rental market is maintained by the solid employment rate, primarily driven by the public service. However, it is important for investors to identify property trends and features tenants are seeking amid the pandemic. In a recent article for Domain, Dr Nicola Powell says house-hunters are put off by, “no dedicated work space, lack of separation from the rest of the family, or limited outdoor space….The COVID-19 crisis has clarified where we want to live, particularly as the prospect of working from home becomes the new norm for desk-based workers. This is further heightened as we consider how we will live through the next inter-pandemic phase.” Investors should be seeking properties with versatile spaces for home offices and access to private outdoor areas for fresh air and exercise to support tenant’s altered lifestyles.
COVID-19 has also left many questioning if large cities are the safest places to live and work, given swift advances in technology which have made working from home a realistic (and often essential) option. Dr Nicola Powell recognises our behaviour has started to change, “Search behaviour suggests the trend towards regional living has been accelerated by the current health crisis. Traditionally, affordability has been a key driver for a tree change, although the lower density living and ability to work remotely could have been a deciding factor”. Going forward, we may see a trend of city-dwellers decentralising to regional areas, such as Canberra, which are still well-connected by infrastructure and public transport, but don’t have the population density of cities such as Sydney or Melbourne.
Strong local economy
Solid employment rates are keeping the local economy afloat in Canberra, particularly now the hospitality industry is able to function under more relaxed restrictions. Canberrans are loyal supporters of local businesses, especially food and drink establishments, so as long as they are open, employed Canberrans will happily eat and drink out where they can, and support takeaway businesses when they can’t.
The low number of COVID-19 cases in the ACT also gives locals and those in surrounding regions more confidence in getting out and about in Canberra for shopping, dining and other attractions. Canberra also has the opportunity to cautiously become a mini-break destination again, especially for those from coastal and regional areas who still want to travel to low-risk destinations for shopping and entertainment. Mini-break visits present increased opportunities for landlords/investors of apartments and short-stay accommodation.
Canberra’s diverse investment options (from townhouses and houses to apartments catering for short or long-term tenants), coupled with high employment rates and a relatively robust economy makes it one of the best places to invest in Australia.