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Capital's housing prices to fall flat

Date

Stephanie Anderson

Canberra's median house price will rise by a mere 1 per cent over the next three years as oversupply and job concerns take their toll on the market, according to forecaster BIS Shrapnel.

It is the lowest projected increase for any capital city as outlined in the Residential Property Prospects 2012-15 report, issued today. Perth and Brisbane are tipped to have increases of 22 and 20 per cent respectively over the same period, Sydney 17 per cent, Darwin 15 per cent and Adelaide 9 per cent. Hobart is expected to rise by 5 per cent and Melbourne by 3 per cent.

Report author Angie Zigomanis said the bleak forecast was due in part to the relative strength of the Canberra market over the past few years.

''To some extent, it's more that Canberra was ahead coming out of the GFC [global financial crisis] and some of the other states that were weaker are now catching up,'' he said.

Mr Zigomanis said oversupply in the housing market would have a substantial impact on prices, following record levels of new dwelling commitments over the past few years in the capital.

He said the increase in construction - prompted by the release of more than 17,000 dwelling sites by the ACT government between 2007-08 and 2010-11 - had been mostly focused on the apartment sector. ''As many come to completion, we expect to see vacancy rates starting to rise,'' he said.

''We expect to see the market go into oversupply.''

The forecast reinforces comments by ACT Treasurer Andrew Barr last month, that units were at saturation point within the capital after multi-unit sites at Belconnen, Gungahlin and Molonglo failed to sell.

However the ACT government's Indicative Land Release Program outlines 1850 dwelling sites set to hit the Belconnen market in the coming financial year, a figure which has raised concerns among local property commentators.

An additional 950 sites in Molonglo and almost 500 in Gungahlin are also expected to be released throughout 2012-13 and an 8044 square metre multi-unit site at Coombs goes to auction today.

In addition to oversupply, Mr Zigomanis said the median house price would be affected by changes within the public service.

''With the public sector such a key driver of the Canberra economy, that will have an impact,'' he said.

''At the moment, it's only sentiment. Potential buyers aren't willing to enter the market if they think they're going to be made redundant.''

Auction clearance rates in the capital have been volatile throughout the year, reaching lows of less than 25 per cent, according to commercial property services firm CBRE. RP Data reported that home owners across the country were also holding onto properties for longer.

In Canberra, the average time between buying and selling a house increased from five years in March 2000 to 8.7 years in March 2012.

LJ Hooker agent Stephen Thompson said some owners had withdrawn their properties from the market after acknowledging they would not achieve the asking price.

He said sellers were becoming more realistic in meeting the market, after more than a year of high financial expectations.

Peter Blackshaw agent Peter Walker said prices were not what they were two years ago and some owners were being rewarded for hanging onto their properties in a market waiting to turn around.

''People have got to get accustomed to their most important asset not being as valuable as it was before,'' he said.

27 comments so far

  • What this report doesn't discuss is the impact of stamp duty which is stopping people moving. That prevents the market moving freely which distorts the price of housing.

    People can't shift premises because stamp duty is prohibitively expensive.

    As a consequence peope are renovating their homes which is starting to become a huge growth industry in Canberra.

    Commenter
    Fido
    Date and time
    June 25, 2012, 8:04AM
    • What you say is true. Which is one reason the ACT government is attempting to reduce reliance on stamp duty, and increase reliance on land value type taxes.

      I refer you to this piece for more information:
      http://www.canberratimes.com.au/act-news/new-home-buyers-get-no-breaks-20120609-203fl.html

      Commenter
      Andrew Freeman - Ginninderra Canberra
      Date and time
      June 25, 2012, 9:11AM
    • I agree with your concerns..

      I understand this is one reason the ACT government is attempting to reduce reliance on stamp duty, and increase reliance on land value type taxes.

      I refer you to this piece for more information:
      http://www.canberratimes.com.au/act-news/new-home-buyers-get-no-breaks-20120609-203fl.html

      Commenter
      Andrew Freeman - Ginninderra Canberra
      Date and time
      June 25, 2012, 9:13AM
  • Canberra's housing prices to fall flat?

    It's about time too!! Now the houses will be priced at what they are worth. Just makes you wonder about the ACT's greedy Labor government, how on earth did the majority of these dumps get passed building inspections?

    Commenter
    Sharron
    Location
    Canberra
    Date and time
    June 25, 2012, 8:48AM
    • Haha what a joke of a report. Still so much for our huge shortage of housing and rising population. All lies from real estates and their self interested economists that crowd the media.
      House rises WILL not happen over the next 3 years, in fact get ready for steady yearly house price drops if the market doesn't just crash hard first. Debt dictates housing prices, and Australia has the highest personal debt levels in the world. Yes the world. Those that doubt google it. Only the spruikers and those negative geared investors cannot see the truth for their rose clouded glasses.
      Even the banks are now admitting this, with the ceo of Westpac recently saying that the years of houses price rises are gone. They are expecting atleast a decade of zero growth or drops.
      Take this whole report with a grain of salt, as it is more a wish list to try and keep very nervous investors and buyers shopping. What they miss is it is too late for spruiking, as the buying market is gone.
      Even as a home owner, I look forward to the coming drops so that one day my children may be able to buy a home and live with some comfort, not surviving off two minute noodles, slaves to a bank.

      Commenter
      Shaun
      Location
      Canberra
      Date and time
      June 25, 2012, 8:54AM
      • Shaun my friend, you are absolutely correct in your commentary! Its refreshing to hear someone speak competently, accurately, and truthfully about the real estate market in the ACT!! I'm a real estate investor in Canada and the US and have monitored your market for several years and as you clearly stated a correction is coming and coming fast! The pricing there is way out of line...when I see very architecturally basic designed, simply constructed one story homes, 200 sq. metres in size ( that are typical new homes in the ACT )selling for $600,000 .....the bubble is ready to burst big time!!!!!

        Keep up the good work Shaun!!! Cheers!!!

        Commenter
        canadian
        Date and time
        June 26, 2012, 1:44PM
    • Re Fido, Ditto.

      Commenter
      Nitro Gangster
      Location
      ACT
      Date and time
      June 25, 2012, 9:19AM
      • Sounds good to me. Hopefully I will be able to afford something other than a one bedroom shoebox.

        Commenter
        Richo
        Location
        Canberra
        Date and time
        June 25, 2012, 9:48AM
        • pretty optimistic view of the market. no mention of falls? is that still taboo? prices will rise eventually but it will take a while before incomes catch up with the absurd growth in prices over the past few years. comparing the research reports for allhomes, median house price in april 2011 was 527k, in april 2012 it was 510k, a 5% (give or take) drop. stock is growing, builders in newer suburbs will be desperate to offload, negatively geared investors looking at a long period of continued losses, and some people will simply *have* to sell. combine that with uncertainty in PS and oversupply... and the CT thinks we may be looking at a 1% rise over 3 years? talk about rose coloured glasses...

          Commenter
          joe
          Date and time
          June 25, 2012, 9:55AM
          • Spot on. Demographics and simple investment return will send this whole market straight over a cliff.

            Like you, I see people who hold onto "hope" as their investment strategy. Buy, hold and hope. They are doomed. As the debt laden baby boomers wind it all up for retirement, sales are going to come thick and fast. Gen-Y has no interest in monster debt (on the macro) and stamp duty is an elephant in the room for any buyer.

            Prices going down/nowhere? prepared to loose $30k on day 1? Why not buy a car! Same proposition.

            The ignorance in this RE-will-increase-forever crowd is profound.

            Commenter
            evanism
            Location
            can-berrrrra
            Date and time
            June 25, 2012, 12:04PM

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