That it’s cheaper to rent a home in Melbourne than in Canberra speaks volumes about the need for new thinking on housing in the national capital.
High-rise, high-density living spaces that build communities, offer affordable housing options to both renters and buyers and support the infrastructure and amenity you expect to see in any world city is imperative if the ACT is to continue to prosper.
Current tight housing vacancy rates coupled with the highest annual increase in house rents in the nation has made Canberra a virtual no-go zone for those seeking affordable, well-located rental digs. And with the ACT population having grown 11.4 per cent since 2011 – with every sign of continued strong increases – it’s only going to get worse.
Who wants to pay a median weekly rent for a house of $505 a week (up 6.3 per cent year on year), particularly when a lack of city and town-centre accommodation means you’ll likely be banished to the outer suburbs to find it?From an environmental perspective alone, a geographic spread of low-rise, low-density housing represents poor long-term planning. A family needs at least two cars to be able to access work, entertainment and shopping options, placing pressures on infrastructure and the environment.
Long-term proliferation of the urban sprawl means opportunities to create vibrant community hubs near transport options, workplaces and public amenities, catering to the wants and needs of a modern, changing society, will be lost.
The latest Domain State of the Market report revealed some interesting statistics about the housing market in Canberra – supporting the view we’ve long held at Geocon that high-rise, precinct-style apartment living is the way forward.
With Canberra showing the highest annual rental yield in the nation at six per cent (an increase of 3.7 per cent year on year), and rental vacancy levels under one per cent - half the national average - centrally located, high-rise apartment precincts near amenities and transport options makes perfect sense in terms of a good buy-to-let investment for those wanting to build wealth.
And given it can be cheaper to service a mortgage than to pay rent in Canberra, apartment living provides a lifeline for first-home buyers and other owner-occupiers, too. Record-low mortgage rates mean it’s easier to pay off a mortgage than it has been in decades, and a new Bureau of Statistics report shows that of all Australian cities, Canberra is the easiest in which to do so, with 15 per cent of monthly household income devoted to repayments, as opposed to a national average of 16 per cent.
Nearly half of our purchasers are first home-buyers, and 87 per cent of our buyers are aged 50 and under. With an entry level apartment price of $282,900, we’re providing viable options for a segment of society that is increasingly being priced out of the market. Eighteen to 35-year-olds – those most demanding of vibrant, dynamic communities with ease of access to work and lifestyle opportunities – account for 60 per cent of all our purchasers, most of whom are from the ACT. Seventy per cent of our buyers are owner-occupiers.
Scare-mongering about an oversupply of apartments belies what we are seeing at the coalface. The reality is that 70 per cent of apartments must be sold before commencement, as per APRA regulation of lenders. Media often delivers the news that with, say, five new buildings under construction, each comprising about 300 units, there must be an oversupply. But DA approval and supply of these apartments to the market could be up to four years away. There is a gross under-supply of "turnkey" apartments in a city that people are moving to in droves because we have the lowest unemployment rate in the country.
There is a very real demand for affordable, mixed-use precincts in vibrant town centres, as our buyer demographics demonstrate.
Geocon is delivering a 35 per cent share of the apartment market in Canberra – with an expected sale of 1000 apartments this year alone – and we are seeing consistent 3-5 per cent growth, with our units selling out quickly.
Canberra, Australia’s only "emerging" city, is changing. We have a world-class new airport, with international flights opening up great opportunities for investment and tourism; the ACT Government is committed to investing in important infrastructure such as the new light rail system, we have the lowest unemployment rates in the nation and the highest wages. Population, meanwhile, is booming. Over the past five years, the city has grown 11 per cent, and that doesn’t count transient populations such as students attending the universities here.
As a business born and bred in Canberra, we are able to make accurate market predictions, and have an expanding portfolio of land holdings so we can quickly adapt to demand. In recent weeks we have purchased sites in the Woden Town Centre, the Parliamentary Triangle and two in the city centre because we have the utmost confidence in Canberra, and the continued demand for affordable yet high-quality accommodation in central locations.
We will transform the new Woden site into a $380 million mixed-use development that will be the catalyst for the revitalisation of the run-down Woden Town Centre, creating new jobs and public amenities. The ACT Government’s announcement that Stage 2 of the Light Rail service would extend from the city to Woden made the purchase a no-brainer for us, with our strategic aim of creating vibrant precincts with easy access to public transport.
Equally, our ambitious Kingston Arts Precinct will breathe new life into this inner suburb through a combination of sleek, contemporary apartments and a thriving cultural centre comprising commercial spaces and an Arts Hub.
Canberra has long flown under the radar against Sydney and Melbourne but all signs point to the fact that increasing numbers are realising the national capital is Australia’s best-kept secret when it comes to opportunity, growth, superior quality of life and long-term capital gains.
Currently, there is an undersupply of turnkey apartments available to move into immediately, to service an ever-increasing demand. Arguments against progress and development -- in particular the concept of high-rise living -- are myopic. If we fail to do as other world cities have done – grown and adapted, had the foresight and courage to introduce new ways of living – we risk being lumbered with the unpopular mantle of bush capital indefinitely. And that would be a tragedy for a city on the cusp of taking its place on the world stage. Geocon Acquires Canberra Retail Centre For $13.35 Million
[Related reading: Geocon Acquires Canberra Retail Centre For $13.35 Million; Geocon To Develop 500 Apartments At Newly-Acquired Site In Canberra; Geocon’s $250 Million Canberra Development Given Green Light]
Geocon is a highly successful integrated property development, construction and hotel management group operating in Canberra. The group has completed more than 1500 residential dwellings since it was created 10 years ago, and expects to deliver 1000 apartments to the market this calendar year. Operating an owner-builder-developer model, there is no like-for-like competitor in Canberra.
Geocon owns and manages four Abode apartment hotels, in Woden, Tuggeranong, Narrabundah and Gungahlin. New Abode hotels are being built in Braddon, Kingston and Murrumbateman, NSW. A new five-star hotel brand is currently in development, with the first two properties planned for the Parliamentary Triangle and Canberra City Centre.
Contributed by Nick Georgalis, Managing Director of Geocon.
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