Spring is typically the busiest time of the year in the Canberra property market. How will this Spring compare to previous years, given the changing property landscape?The current official cash rate (Aug 2022), as determined by the Reserve Bank of Australia (RBA), is 1.85% which equates to a variable homeowner retail rate of around 4% to 5%. Based on the latest RBA projections, the cash rate in Australia is expected to increase to a peak of around 2.5% with variable homeowner retail rates of around 4.65% to 5.65%. Source: Canstar.Interestingly, in response to the latest interest rate rise in August 2022, a number of the banks have cut some of their fixed rate loans. CBA, for example, is currently offering a 4-year fixed rate of 4.99%. Some financial commentators are even suggesting the RBA will cut official interest rates in late 2023.
Of course, there are many factors that affect the Canberra property market besides just interest rates. Supply and demand, the rental market, sentiment, unemployment rates, construction costs, wages growth and the list goes on.
A stand-out sector of the current property market are units and entry level homes. It’s not surprising, considering the booming rental market. With a super low 0.8% vacancy rate putting upward pressure on rents, when faced with the choice, many (if able) are making the choice to buy despite rising interest rates.
Houses are still selling, just not as fast. The average time a house spent on the market has changed from a lightning fast 23 days recorded in November 2021. This has drawn out to an average of 48 days in July 2022. At the same time, units are now selling quicker than houses, dropping to 46 days. Source: Allhomes.
The strong growth in property prices has slowed for now and seems to be stabilising or dropping modestly. Canberra’s property market is quite unique and tends to have shorter and more shallow downturns compared to other capital cities. This is possibly explained by Canberra’s high average wages, low unemployment and good affordability (percentage of income needed for repayments), compared to other capital cities.
Life continues to move forward in Canberra. Young families are continuing to outgrow their first homes and need to upgrade. Older people will continue to downsize to better suit their needs and priorities. Immigrants from interstate and overseas keep on discovering the ‘Bush Capital’ and the unique lifestyle and opportunities Canberra has to offer and choose to put down their roots here.
Our top tip for sellers this Spring?
Make the choice to turn off the news and concentrate on the things you can control. Excellent presentation, professional marketing and the right sale method will maximise the price of your home, regardless of the market. Engage a real estate agent early on to get recommendations on where to spend your time/money when preparing your home for sale.
Our top tip for buyers this Spring?
Find a great mortgage broker to complete the buying journey with you. With lending criteria changing and some lenders offering better rates than others, having an experienced and diligent broker will save you time and can make a big difference to the interest rate you end up paying.
If you're considering buying or selling and would like some advice specific to your circumstances, please feel free to get in touch.