With the end of financial year now behind us, various industry stalwarts have released their reports commenting on the capital growth of the Australian Residential property market and it the results confirm what we have long suspected; Sydney and Melbourne price growth has experienced a drastic decline on the past 5 years performances.
In the 12 months to June 2018, median house prices for Sydney saw a decline of 7.4% and Melbourne growth slowed to just 0.5% over the same period.
As Sydney and Melbourne move further into their correction phase, the medium-term outlook remains bleak for these property markets. Despite reasonable growth in Melbourne and Sydney in 2016 and 17, it has become more evident that the medium term performance will be less flattering as much of the 2016/17 growth is lost during correction. At Meridian it is our intention to avoid markets such as this and target areas with much more upside over the medium term.
So where to next?
In the last 2 months, there has been growing enthusiasm for the future capital growth prospects of our Nation’s capital- Canberra.
In the year to June 2018, median dwelling prices grew by 7.7% in Year- on- Year terms which begs the question; What is driving this growth?
Below is a quick snapshot of the main growth drivers:
Growth in Gross State Product reached 4.6 percent in 2016-17, the highest in the country. This follows a solid 3.9 per cent growth in 2015-16. According to the ACT 2018 budget, this high rate of growth expected continue in the near term, with 4 per cent growth estimated for 2017-18 and a forecast of 3¼ per cent in 2018-19.
This economic growth is being accompanied by strong jobs growth, with over 10,000 jobs created in the ACT during 2017. This represents an employment growth rate of 4.6 per cent which is well above the national rate of 3.3 per cent.
Unemployment in the ACT remains well below 4 per cent, the lowest of any jurisdiction in the country.
In addition to this, the Territory is investing heavily in future infrastructure.
As part of the ACT government’s strategy to diversify the economy away from its traditional reliance on the public service sector, it has committed $9.8 million to establish the Priority Investment Program.
Canberra’s population is growing rapidly, having realised 11 per cent growth between the 2011 and 2016 Census counts – the fastest rate of growth in the country.
As at December 2017, there was an estimated 416,000 people living in the ACT. This represents an increase of 8,800 people over the previous year. This increase is highest recorded growth recorded for the Territory since 2012.
According to Budget Estimates, the ACT’s estimated resident population is forecast to grow by 1¾ per cent in 2017‑18 and 1½ per cent thereafter, reaching approximately 443,000 people by 2021-22.
Interestingly, recent building data released by the ABS indicated that building approvals have contracted sharply over the past 12 months despite the vacancy trended downwards from 4.2% in 2014 to approximately 1% as at May 2018.
In acknowledgement of the above, the outlook is very positive with many industry pundits now tipping Canberra to be amongst the top performers terms of capital growth over the next few years.
To hear what the others are saying, please click on some of the links below.
 ABS- Cat Series 3412.0, 3101.0
 Realestate.com.au- Property Outlook Australian Property Market Report - July 2018