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Capital gains in the capital

Canberra has been one of the strongest performing cities for rental growth in the past 15 years, new data shows.

RP Data on capital city rental markets issued on Thursday indicates that despite a softening in the market in the past year the overall long-term performance of houses and units remains competitive with other capital cities.

During the past 15 years to April this year capital city rental rates have increased at an average annual amount of 4.2 per cent for houses and 3.7 per cent for units. In the ACT house rents have risen on average by 4 per cent each year and units by 4.5 per cent.

This puts the territory alongside Perth, Sydney and Brisbane as the strongest performers over the 15-year timeframe.

RP Data research director Tim Lawless said during the past 15 years Canberra had been a strong rental market especially when considering the high dwelling values in the territory.

He said normally a marketplace recording strong growth in house and unit prices would not experience a similar strong growth in rent - but this was the case in the ACT.

And Mr Lawless said Canberra was still an attractive place for investors because it offered good rental yields as well as capital gains.

While in the past it was common for people to target just capital gains things had changed.

''Now I think we are seeing investors looking for a more balanced portfolio,'' he said.

The data shows Canberra has recorded the second highest gross rental yield for units at 5.7 per cent behind Darwin with 6.1 per cent.

Canberra recorded the third most expensive median rents for houses in the country at $539 a week and units at $448 a week as of last month. A decade ago the median rent for a house in the ACT was $339 while a unit netted $284 a week.

Mr Lawless said in the past 12 months rental growth in the territory had flatlined at 0.4 per cent for units and fallen 1 per cent for houses, but this just represented a pause in the market. He said this partly could be attributed to politics. ''A lot of people … are still waiting to see how the election will affect them.''

14 comments

  • The election is causing a "pause" in *rent*? Reeeeeally? C'mon, you have to do better than that. So, people are deciding not to live in housing until the election but to camp out in parks?

    Rent has "paused" (declined) because of a flood of new supply. Though I do expect that, if the mad monk comes in and slashes and burns, that will result in less demand on top of this new supply.

    Commenter
    joe
    Date and time
    May 24, 2013, 9:01AM
    • Agreed. Everything is on hold until after the Federal Election. I do hope it is not 1995 again but at least the commute to work will be easier.

      Commenter
      Outraged of Palmerston
      Date and time
      May 24, 2013, 10:33AM
    • The current fear of buying property in Canberra due to the potential of a recession after September based on what happened when Howard came in and slashed the public service is completely misguided. If you look at the price of housing when Howard came in it actually steadily went up in the ACT by 5% p.a. over his entire first term. What about unemployment you might say, well it actually went down in the ACT when Howard came in from 8% at the start of his first term to 4% at the end (all data from ABS, look it up for yourself to be informed).

      Though there is some truth to the myth about a recession in the ACT as the period of 1-3 years BEFORE Howard came in saw a complete flattening of property prices and a rise in unemployment to a peak of 9.1% in Feb 1994.

      This really shows how biased Canberrans are as they blame this recession on the Howard government, and this lie was sold so well through ALP propaganda that it has now created an artificial recession out of fear of the incoming LNP Govt!

      Not that any of this particularly worries me as I hope to be a future first home owner, so keep the false fear coming Canberrans, bring property prices down!

      Commenter
      Canberra shows it's true ALP colours
      Location
      Canberra
      Date and time
      May 24, 2013, 5:32PM
  • Yer yer yer - invest invest invest - more propoganda from self interest property groups. Look at the hugh number of units on the market - nobody in their right mind would invest in Canberra's super inflated market. Buying a one/two bedroom unit/apartment around the CBD for 600k plus is bad economics because you will never ever get your investment back. Canberra's realestate is either old, poorly designed, boxie and priced CBD apartments in London, NewYork or Paris. Sales will continue to stagnate further until there is a serious downward movement in prices and investers should just realize they are not sitting on future pots of gold.

    Commenter
    Blu fin
    Date and time
    May 24, 2013, 9:19AM
    • I'm more interested in the trend for the next 3 years, rather than the past 15

      Commenter
      joey_mac
      Date and time
      May 24, 2013, 9:44AM
      • One reason and one reason only. High rents are down to the greed of the Real Estate agencies!

        Commenter
        Shug
        Location
        Canberra
        Date and time
        May 24, 2013, 10:41AM
        • Forget the fact that we are in one of the biggest debt fuelled property bubbles the world has ever seen.
          BUY BUY BUY lemmings no matter what cost.

          We will soon make what happen in the States and Europe look like a minor hiccup!

          Commenter
          pete
          Date and time
          May 24, 2013, 10:52AM
          • There is considerable oversupply of units and the rental market is collapsing in Canberra. The Gillard government has essentially frozen recruitment to the Public Service and the Abbott government is likely to reduce it further. To suggest that investors purchase in Canberra at the present time is simply spruiking.

            Commenter
            Reality Check
            Date and time
            May 24, 2013, 10:54AM
            • I love the language they use. "One of the strongest performing cities for rental growth" You mean "high rental inflation"?

              How come you never hear "One of the strongest performing cities for petrol price growth" or "one of One of the strongest performing cities for growth in the price of bread". Because for every other basic necessity, inflation is a bad thing and we combat it rather than celebrate it?

              Real estate is nuts.

              Commenter
              Crumb
              Date and time
              May 24, 2013, 11:49AM
              • What is worse is the idiotic language used. It's a pathetic attempt to dress the muton as lamb.

                Commenter
                Evanism
                Date and time
                May 24, 2013, 5:18PM

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