Moving from NYC to Canberra, where to buy?

[C Stewart]

Great post. Realistic assessment of whats happening in my view. I sometimes wonder how it will all play out, it does look increasingly alarming and doesn't make too much sense.

Andy, i bought an apartment recently OTP in Cbr. Got a great discount of the market price (~10%) - which i'm told is unusual for OTP stock. If you're looking at new stock, don't be afriad to throw in lowball offers.

Right now, i think any offer is a good offer. There is so much marketing gimic around by everyone involved, and emotional bias from locals - so i'd second Redom's words on being careful and researching widely.

I agree, now if definately a good time to be getting some decent discounts in Canberra. Market is definately soft. Whether you can get the purchase price down sufficiently to compensate you for the medium-term fundamentals is a personal judgement call though.

 

[ChrisA1]

Mr Fluffy homes and options

Others have brought up the Mr Fluffy houses and it seems this could bring some interesting times over the next few years....

First with the small spike in demand as the current owners look for other options (either buying or renting), then as the houses are demolished, the government is looking to sell off the vacant land (with some rezoned) - with some of the blocks in inner circle areas and most in the inner - middle circles?

So... if you're looking for a block to build on in the inner to middle South (Yarralumla to Kambah, Fadden etc) and can wait a little while, this could be an option. Others may have more info about how the vacant land will be released. I would dare say this would occur in about 2 years' time after the buy back and demolition/clean-up process is completed.

 

[Redom]

Others have brought up the Mr Fluffy houses and it seems this could bring some interesting times over the next few years....

First with the small spike in demand as the current owners look for other options (either buying or renting), then as the houses are demolished, the government is looking to sell off the vacant land (with some rezoned) - with some of the blocks in inner circle areas and most in the inner - middle circles?

So... if you're looking for a block to build on in the inner to middle South (Yarralumla to Kambah, Fadden etc) and can wait a little while, this could be an option. Others may have more info about how the vacant land will be released. I would dare say this would occur in about 2 years' time after the buy back and demolition/clean-up process is completed.

Hmm so the land is being rezoned for future residential use? Usually market forces dictate and they sell smaller lots and more density.

If thats the case, completely agree with you, there'll be a short term hit to supply (supposed price rise) with a long term increase in supply (supposed price fall).

Cheers,
Redom

 

[property_girl]

Redom--I am impressed: you know your numbers.

I agree with what others have said. I have seen a sharp downturn in the past. It lasted about seven years. And then, of a sudden, whoosh, prices went through the roof.

There is huge oversupply of units at the moment, so it's a great time to buy. Houses, I am not so sure. During the last downturn prices in the outer suburbs dropped by more than those in the inner suburbs, where they more or less held their ground (but still didn't increase for years).

imho, while Abbott's in power, prices will stay low.

 

[ChrisA1]

Hmm so the land is being rezoned for future residential use? Usually market forces dictate and they sell smaller lots and more density.

Haven't heard anything about what type of rezoning it will be - could be anything from splitting into smaller blocks, multi-dwelling (duplexes, townhouses, even apartments?) or even commercial?? Depending on location of block.

Slightly off topic here, but I wonder what implications this rezoning will have on the wider Canberra landscape - will others be able to rezone their properties in line with the zoning that's occurring with the Mr Fluffy properties?

 

[property_girl]

I hope not. I like the inner suburbs having large blocks and not too much infill.

 

[Jamie M]

Haven't heard anything about what type of rezoning it will be - could be anything from splitting into smaller blocks, multi-dwelling (duplexes, townhouses, even apartments?) or even commercial?? Depending on location of block.

I've heard about the possibility of block splitting. Some of those properties are on massive old school blocks.

Cheers

Jamie

 

[S1mon]

We purchased our PPOR near the centre of Belco in July last year and it was recently valued for 16% more than what we paid

thats impressive..what suburb?


and re. mr fluffy...im not a believer in the noticeable increased demand thing given there is plenty of supply in new suburbs..lawson,molonglo etc...Canberras small but not that small

anyhow, lucky the ACT govt is on the ball (ie. keen for as much revenue as possible) as per this article.

 

[ChrisA1]

Interesting article S1mon. I could well understand that the LDA would try to jump on this as well.

Many of the Mr Fluffy owners will want to stay on the inner suburbs of Canberra. Molongolo or Gungahlin is a fair bit different to Yarralumla or Fadden.

 

[Jaggannath]

Good work - it's the place to be

Cheers

Jamie

I thought that, then I heard some weirdo who wants a backyard basketball court moved there, now I'm worried about my neighbours

 

[Jamie M]

I thought that, then I heard some weirdo who wants a backyard basketball court moved there, now I'm worried about my neighbours

Ha! half my backyard is a concrete slab, it's looking glorious

My neighbor is the one building it for me!

Cheers

Jamie

 

[Canberran]

Good assessments for apartments/units.

Houses will hold values at this stage especially Mr Fluffy homes owners start to look for their next home.

In medium term Canberra market is looking not pretty. Who wants to hold assests which have a not so clear upside potential but more likely the downside? Population is dropping, Oversupply is going on for a while, PS sacking is still on, and ACT gov budget situation is not in good shape are all impact on medium term of the prospective of the investment market in Canberra.

Hi Andynyc - definitely love Canberra too. I moved from Sydney a few years ago and now spend my time between the two cities. I would move back to Sydney permanently - but my partner and I love it here.

Regarding Canberra as an investment destination - i think i may be a little more skeptical. Personally, i think what i've heard from most people involved in the market is biased BS - so be careful who you speak to. 'Bottom of the cycle' they'll tell you - the real estate agents, the brokers, everyone with a vested interest. 'Now's the time to buy' is what you'll hear. 'Great deals', etc etc.

Regarding the macro pundits - the main view is that it will basically say itll be flat for an extended period of time.

I've spent ardous amounts of time talking to Canberra long timers - they say its part of the cycle and they say this when the last Government came in. They always point to the 'demand' side of the equation.

If i were a buyer, I'd forget about the demand side altogether (we're probably at the bottom when you only consider demand, employment should improve over the years) - the risk is all on the supply side.

Canberra is oversupplied now (just ask someone about how much they had to drop their rent by).

However, it will be drastically oversupplied within 24 months. It may be difficult to get an appreciation of this, but i'd spend some time driving around key localities (City/Braddon, Inner South, Woden, Belco, Gungahlin and Tuggers). You'll see buildings going up everywhere - its nuts. Then go out for a drive in the new areas, its also crazy (the typical First Home Owners Market).

FYI - i'd spend time reading BISShrapnels granular work. They use simple building approval numbers to get the 'supply side' of the story in every state, including Canberra - and compare it to demand. The numbers arent pretty. An oversupply issue that grows year on year for the next 3 years. This will all need to be 'soaked up', and economics101 tells you that prices will adjust to reflect this. There'll be friction in any adjustment, ppl in Cbr arent very leveraged and can hold onto their stock.

The effect on yields has been significant so far (the forums have some insight on this) - but this is before most of the new stock has come online. In 24 months, most of it will be there.

Narrow in on areas where supply isn't outgrowing demand - but consider the correlation between areas. For example, Turner may not be oversupplied, but its right next to Braddon - so the effect will translate over to the other side of Northbourne.

Personally, i'd sit pretty and enjoy being a renter. Wait until the supply comes online and then use your best bargaining tool - competition. I've watched prices fall 20-30k in my building over the last 6 months. Theres still next to no one attending the open homes. There's about another 10 developments that will come online within walking distance.

Good luck! P.s. if your talking to Jamie, you're in good hands!

Cheers,
Redom

 

[mcarthur]

In medium term Canberra market is looking not pretty. Who wants to hold assests which have a not so clear upside potential but more likely the downside? Population is dropping, Oversupply is going on for a while, PS sacking is still on, and ACT gov budget situation is not in good shape are all impact on medium term of the prospective of the investment market in Canberra.

I'm not so negative on the medium term - Canberra hasn't gone the gangbusters of Sydney or Melbourne (or Brisbane) lately; that means there's some play there for when the next mini-boom comes; the PS demolition has had an impact for sure, but not terribly so; it won't be the second Sydney airport, but there could be light rail (ha!) and in general I think an upsurge is more likely to occur in the medium (2-5yrs; next govt) than long term (8-12yrs).

 

[Redom]

I'm not so negative on the medium term - Canberra hasn't gone the gangbusters of Sydney or Melbourne (or Brisbane) lately; that means there's some play there for when the next mini-boom comes; the PS demolition has had an impact for sure, but not terribly so; it won't be the second Sydney airport, but there could be light rail (ha!) and in general I think an upsurge is more likely to occur in the medium (2-5yrs; next govt) than long term (8-12yrs).

Despite my earlier post, I definitely wouldn't be surprised to see your view eventuate mcarthur.

There's been an adjustment in itself with the period of an 'stability' in the current market relative to other markets.

The supply side of the story is a bit of a question mark to me though.

Cheers,
Redom

 

[Jamie M]

I'm not so negative on the medium term - Canberra hasn't gone the gangbusters of Sydney or Melbourne (or Brisbane) lately; that means there's some play there for when the next mini-boom comes; the PS demolition has had an impact for sure, but not terribly so; it won't be the second Sydney airport, but there could be light rail (ha!) and in general I think an upsurge is more likely to occur in the medium (2-5yrs; next govt) than long term (8-12yrs).

I feel the same.

Obviously I'm a small business owner in Canberra that does rely on the market so my opinion could be viewed as biased.

However - there's not a whole lot of new listings in decent/established areas coming on line. Yes - there's lots of development in newer estates and I agree 100% that off the plan, etc in Canberra is not a good idea.

It will be interesting to see what the impact of this Mr Fluffy saga will have too. I can't see those 1000+ effected owners running out to buy in new estates. They will probably want to stay within their immediate area -which is going to have an effect on prices within those established areas.

Today I spoke with a couple who are going to opt into the govt. buy back - but are worried that they won't be able to find a comparable property within the same area for a similar price because there's quite a few of them in the same situation - competing in a market where there's bugger all stock.

Cheers

Jamie

 

[Canberran]

Sydney did not go up while Canberra did in early 2000.

Light rail is a negative for Canberra people if it gets built during this climate. It will be a much bigger burden than ACTION (3 million/Week loss) to rates payers. Close to 1 billion $ to build in a town of less than 400,000 people. The rail serves a much less population. (Gungahlin population of 5617 according to 2011 Census and projection is 50000 in 4-5 years)

All property investors in Canberra should check their rates and land tax notice to realise the big increase since early 2000. And escalated in recent years. Apartments investors are paying more land tax since 2014. Talked to a few agents and not many investors in the market.

It is too early to talk about the boom while the market is still trending down.

I agree with Jamie that the established suburb around most of the Mr Fluffy houses will hold up values and may see increase in the short time 1-2 years. Medium term not so promising. Long term I do not know.

I'm not so negative on the medium term - Canberra hasn't gone the gangbusters of Sydney or Melbourne (or Brisbane) lately; that means there's some play there for when the next mini-boom comes; the PS demolition has had an impact for sure, but not terribly so; it won't be the second Sydney airport, but there could be light rail (ha!) and in general I think an upsurge is more likely to occur in the medium (2-5yrs; next govt) than long term (8-12yrs).

 

[geoffw]

There's suggestions now that defence is holding more stock than they need in Canberra to ensure that a sell off doesn't hit the residential real estate market too hard. Canberra Times

 

[mcarthur]

There's suggestions now that defence is holding more stock than they need in Canberra to ensure that a sell off doesn't hit the residential real estate market too hard. Canberra Times

Yes, I saw that.
fluffy = up for established suburbs (perhaps!),
defence = down for some newer suburbs perhaps.
The rules for DHA means that they are almost never in established suburbs.

So the different demographics may mean these two effects may only minimally touch each other.

 

[Redom]

Does anyone have a great sense of where Canberra is at RIGHT now? Predicting the future is all crystal ball glazing and i'm starting to suspect that much of the price adjustment may have already happened. While i have aired my views on particular dynamics that appear to be playing out, its difficult to predict how all the forces jumble together to impact on price.

I think its clear to most that its a 'soft' market. But in numbers, what does that mean in terms of $$$.

For the sub 500-700k market in particular (for established units and houses)?

Are we talking about 0% decline, 10% declines, 20%? No point looking in Cbr median data (basically stable prices), thats so skewed by new development/stock that its difficult to read.

I've got anectodal evidence based on watching a few prices - and their not too rosy (1br units selling for 415k in Turner, down to 350k ish now).

Would be good to hear others experience?

To me fleshing this out is a way to get to unpack the statement 'we're at the bottom now'?

Cheers,
Redom

 

[Canberran]

Not yet bottom is the simple answer.

Around 0% growth for a few years is painful.

Cheers

Does anyone have a great sense of where Canberra is at RIGHT now? Predicting the future is all crystal ball glazing and i'm starting to suspect that much of the price adjustment may have already happened. While i have aired my views on particular dynamics that appear to be playing out, its difficult to predict how all the forces jumble together to impact on price.

I think its clear to most that its a 'soft' market. But in numbers, what does that mean in terms of $$$.

For the sub 500-700k market in particular (for established units and houses)?

Are we talking about 0% decline, 10% declines, 20%? No point looking in Cbr median data (basically stable prices), thats so skewed by new development/stock that its difficult to read.

I've got anectodal evidence based on watching a few prices - and their not too rosy (1br units selling for 415k in Turner, down to 350k ish now).

Would be good to hear others experience?

To me fleshing this out is a way to get to unpack the statement 'we're at the bottom now'?

Cheers,
Redom