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With the amount of uncertainty surrounding the property market in the lead up to the 2019 Federal election, you’d be forgiven for shying away from property as an investment option at the moment. However, Canberra appears resistant to any drop in the real estate market - stuck in its own little blissful bubble. This is tremendous news for ACT investors and homeowners, where a number of areas around the ACT and Queanbeyan have actually reported annual growth.

In comparison to other capital cities, Canberra is holding its own in the property stakes. According to All Homes December 2018 Quarterly Report, the top three cities for median house price growth year on year were: Hobart at $479,685 (+8%), Adelaide $537,971 (+1.7%) and Canberra $738,933 (+0.0%). Meanwhile the hardest hit cities were Sydney and Melbourne with median house prices of $1,062,619 (-9.9%) and $833,321 (-8.4%) respectively.

Units were a completely different story, with Adelaide being the only capital city to report growth in this sector with a year on year median price of $321,430 (+0.7%). Darwin was hit the hardest at -13%, followed by Brisbane at -7.9%.

Locally, all areas in the ACT region reported growth for median house prices, with the top-performing areas being: Weston Creek $704,000 (+7.5%), Belconnen $606,000 (+4.5%) and the Inner South $1,302,500 (+4.2%). Queanbeyan is the most affordable area to purchase a house, with the median price sitting at $570,000 (+3.8%). By and large, the median unit prices took a hit, but the exceptions were Tuggeranong at $420,000 with stellar growth of +7.7% and Weston Creek $449,500 (+1.1%). The most affordable districts to purchase a unit are Queanbeyan with a median price of $266,500, closely followed by Belconnen at $390,000.

There are many reasons to invest in Canberra property, over other top-performing cities such as Hobart and Adelaide. Firstly, Canberra is fortunate to be bolstered by a public service workforce and other businesses that support Government departments and represent a relatively stable source of employment. However, the most compelling reason to invest in Canberra property is the astronomical rental rates – the highest in Australia to be precise!

“Canberra is the most expensive city to rent a house with the latest Domain Group data revealing rents have surpassed Sydney to become the highest in the nation for the first time in 11 years. The Domain Rental Report for the December quarter shows the median weekly asking rent for houses in the capital has jumped to an average of $560 per week – an annual increase of 3.7 per cent. In the same period, Sydney’s house rents declined 1.8 per cent to $540,” a recent article on Allhomes.com.au explained. The median weekly rent for houses in Hobart and Adelaide is $420 and $310, respectively.

Nicola Powell, senior research analyst for Domain explained some of the key factors driving this trend:

1.    There are still a number of Mr Fluffy residents in rental accommodation while they build their new homes, following the acquisition of land during the Mr Fluffy asbestos removal scheme.

2.    “New residents continue to be lured from interstate and overseas by greater job prospects and the city’s growing and reputable university sector, while transient contract workers are attracted by the major infrastructure projects underway,” Dr Powell said.

3.    The high-income workforce has forced rental prices up, which make them unaffordable for lower income earners.

4.    Investors have been hit with increased land tax and rates, which has resulted in rental increases being passed onto tenants to recoup costs.

It is also important to understand that this rental increase has been realised in the housing market only in comparison to Sydney. The unit market in Canberra is not as strong.

Increased rental rates and competition between tenants gives landlords the upper hand, as they can pick and choose their tenants. In addition, investors continue to reap the rewards of capital appreciation, whilst also receiving handsome return on investment with a strong rental return. Canberra is certainly the place to be an investor at the moment!