May 22, 2019 | 05:59 AM

Property & Home

15.08.2018Property market round-up: Focus on the ACT

Here's a run-down of exactly what's happening in the Australian Capital Territory's (ACT) property market.

In many countries around the world, the capital city tends to be a hub for financial value and booming property prices. But Australia’s federal system has always stopped this from being a guaranteed outcome. The role of the states has often led to cities other than Canberra – especially Sydney and Melbourne –surging ahead in some ways.

But that doesn’t necessarily mean there’s nothing going for Canberra. In fact, there are some heartening statistics coming out of the city. Property prices in Canberra went up 3.8% over the year to March 2018 and it’s got a fast-growing, house-hungry population thanks in part to a turnaround in popular perceptions of what it’s like to live there. With all this in mind, here’s a run-down of exactly what’s happening in the Australian Capital Territory’s (ACT) property market.

The state of affairs

There’s no getting around it: Australia’s capital has seen significant growth in recent years when it comes to house prices, and it doesn’t look like things will change any time soon. Between February 2017 and February 2018, prices in Canberra rose by over 3% over the course of the year – a figure which stands in stark contrast to the equivalent stats for most other cities around mainland Australia, where growth was generally more sluggish. In Perth, for example, price change over the same period decreased by 2.7% – and in Brisbane, the rise was only 1.8%.

Big incomes

Despite its prestige as the country’s capital and its status as home to the parliament building, the Australian National University and much more, Canberra was once seen as something of a backwater – especially in terms of property. Even high-powered and well-paid officials like the Prime Minister choose not to live there all the time, spending time at Kirribilli House in Sydney instead. But this perception is changing. According to BIS Oxford Economics, Canberra has the largest average household earnings of any capital city in Australia, which means there’s plenty of money going around to spend on the sort of homes that the normal Australian family dreams of.

Problems on the horizon

Despite these positive trends, there may be trouble in store for Canberra and the ACT. This is due in part to the decisions of local authorities to keep land taxes in place. The government of the ACT has pushed up the amount it makes from these taxes by around 95% over the last six years or so. It is also believed that the land tax will be netting the territory’s government around $154m in the next couple of years.

From a property market perspective, the main risk posed by the growth of the local land tax is that it will turn away the types of investment which some say are much-needed. For existing homeowners already benefiting from price rises, this is probably not too much of a worry. But for the city of Canberra’s status, these taxes may convince investors that bringing their cash to the city is a bad idea – and that could, over the long term, prevent Canberra from evolving into a thriving global city.

The capital might not be the most bustling city in Australia, but its housing market is certainly looking rosy. With fast-growing sale values and high incomes around every corner, the future of Canberra looks bright. But as with every Australian city experiencing a somewhat positive property outlook, there are no guarantees that it will stay like this forever and the presence of high land taxes makes it uncertain that Canberra will attract the sort of investment needed to turn it into the next Sydney or Melbourne. For now, though, homeowners and investors who are already here and who are starting to reap the rewards of rising property prices are likely to feel pretty pleased with themselves – and with good reason.

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