With property prices rising and more people entering the rental market, Elliot Woods* explains how investing in a rental property is a wise, and affordable, step forward.
The property market in Canberra continues to exceed all pre-Covid expectations into the second half of 2021, with investors enjoying significant returns from both yield and capital gain while numbers continue to gain momentum.
Returns being enjoyed by investors at Geocon’s Nightfall and High Society developments have been particularly pleasing, where unit price growth has jumped by almost 9% in the last 12 months.
Nightfall is the final piece of Geocon’s 1300-apartment Republic Precinct in Belconnen, due to be completed by the end of 2021. High Society is stage two of the Precinct, which was completed, settled and occupied in December 2021.
Close to the University of Canberra, public hospitals, schools, transport, Lake Ginninderra and Westfield Belconnen, both Nightfall and High Society have received unprecedented investor interest since the market boomed at the beginning of 2021.
The numbers are now so compelling that Canberra is top of the stack in each of Australia’s the key performance indicators including yield, vacancy, employment, wages and capital growth.
Growth of almost 9% on apartments in Canberra’s northern suburb of Belconnen have brazenly defied lock-down predictions, some of which speculated dips of anywhere up to 30% for the ACT.
Leading property economist and commentator, Dr Andrew Wilson, described the numbers as both ‘remarkable’ and ‘outstanding’ during his recent trip to the capital to speak with investors.
“It is remarkable to see how many market-factors Canberra is now leading, and how much growth there has been across the board for the market to arrive where it is today,” Dr Wilson said.
“Using Geocon’s Nightfall and High Society projects in the Republic Precinct as an example, investors can expect average rents of $650, easily accommodating a positively geared loan and a set-and-forget path to becoming financially secure.
“Coupling this with capital growth of around 9% in Belconnen, unit vacancy of just over 1% and the argument for Canberra investment becomes almost impossible to ignore.”
Dr Wilson said there were several factors driving investor appeal in Canberra, the most obvious being the lack of quality stock, which drove down vacancy and up rental yields.
“Developers like Geocon can try to keep up with demand, but it’s never long until there is a shortage and rents rise.
“It’s not rocket science … with vacancy of just over 1%, there is nothing to rent and so the price goes up,” he said.
“Canberra is a smart, well paid population. The ACT has had Australia’s lowest unemployment numbers for the year-to-date at just 3.4%, almost 2% lower than the national average at 5.5%.
Dr Wilson said the investor market in Canberra had become busier than any other Australian capital city during 2021, citing auction clearance rates north of 90% as evidence the market had woken up to the ACT.
“With interest rates so low, negative gearing is less attractive and yield really has come into play. The full rental market and fastest returns of any city over the last five years really do make Canberra an obvious choice for property investors,” Dr Wilson said.
If you’re looking to invest, Geocon’s diverse property opportunities are a great place to start your journey.
*Elliot Woods is Corporate Affairs Manager at Geocon.
He can be contacted at [email protected]