Investors look to be treating the Canberra apartment market with caution ahead of likely public service spending cuts, with the capital’s unit values posting the highest fall in the country over the otherwise positive month of March.
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The month saw a 1.3 per cent rise in dwelling values for Australia, with Perth recording the highest level of growth at 3.4 per cent in March, and Adelaide the slowest, with the market remaining steady, according to the RP Data-Rismark Home Value Index.
Canberra’s results were the second slowest in the nation, with a 0.4 per cent growth in overall dwelling values over the month, including a fall in unit values of 2.5 per cent in March.
The growth in unit values for Canberra was also weak over the quarter, with values inching up by just 0.9 per cent. House values grew by just 0.7 per cent over March, capping off a 4.1 per cent rise since the start of the year.
RP Data senior research analyst Cameron Kusher said the poor unit results could be attributed to “sagging investor demand”, as potential buyers look warily to possible spending cuts in the upcoming budget and after the next election.
“Investors, who typically are the ones that buy units, particularly in Canberra … may be a little bit concerned about what’s going to happen with the election, and may be holding off on making that decision until the election or even until the budget to wait and see what happens to the public service,” Mr Kusher said.
“It may pick up after the budget, but it may wait until after the election until we see a bit of improvement in that sector of the market in Canberra.”
He said with units making up such a small slice of the Canberra market they were prone to jump around month-on-month, but regardless of their performance, solid results in house values would continue to drive the capital’s overall performance.
“Overwhelmingly, Canberra is more influenced by the housing market, and that’s highlighted by the fact that over the quarter unit values increased 0.9 per cent, house values are up 4.1 per cent, and you’ve got a 3.8 per cent overall figure,” Mr Kusher said.
“As long as houses continue to go well, you’d expect that Canberra will continue to go well.”
The solid national growth figures represented the best quarterly results since mid-2010, according to analysis by Rismark, with the middle-priced housing sector remaining the healthiest market in the country.
“Dwelling values across the middle sixty per cent of the housing market have increased by 1.6 per cent over the year to February, compared with a 0.9 per cent fall in dwelling values at the most affordable end of the housing market, and a 0.6 per cent fall at the most expensive end of the pricing spectrum,” the report said.
Analysis also pointed towards continued recovery in the housing market, with strong auction clearance rates and shorter average selling times across the country.
