Open Spaces, Historic Homes and Rising Prices Define Canberra
The city’s highly sought-after and tightly held inner south is commanding top dollar.
7 min
Despite being the country’s capital, Canberra is only Australia’s eighth-largest city with just over 431,000 residents, but is now home to the second-highest dwelling values. The 12-month median cost of a home in Canberra is $793,872, only behind Sydney’s $1.017 million but higher than Melbourne’s $762,068, according to CoreLogic data as of August.
Sydney has its glitzy harbour and beaches; Melbourne its edgy European vibe, however Canberra is affectionately known as The Bush Capital, as it’s located inland. As an entirely planned city, and the seat of parliament, Canberra has long existed under the real estate radar maintaining a serious persona since its conception in 1913. Fast-forward 100 years and the capital started coming of age—and hasn’t slowed down.
Today’s Canberra has ranked among the world’s best cities; earning bronze in Lonely Planet’s 2018 Best in Travel series and voted the world’s most liveable city by the Organisation for Economic Co-operation and Development (OECD) in 2014. With a booming local food scene, a billion-dollar lakeside redevelopment, plus a world-class arts and culture movement, Canberra has transformed from a sober political city to a dynamic destination.
Canberra emerged this year from Covid-19 with a seemingly pandemic-proof property market bolstered by high average household incomes, a secure public service workforce and successful handling of the virus (at just over 130 confirmed cases since records began in March 2020. As a result, local property values skyrocketed by 18.1% in the 12 months to July, with the luxury-home market leading the charge, according to CoreLogic figures.
Canberra’s highly sought-after and tightly held inner south, in particular, is currently commanding top dollar with experts agreeing values are on track to rise further. Three Canberra suburbs in high demand, and experiencing solid price growth as a result, are Kingston, Griffith and Forrest.
Boundaries
A prestigious patch of real estate measuring approximately one square mile, the three most in-demand suburbs of Canberra’s inner south—Kingston, Griffith and Forrest—are anchored by one common denominator: They surround the exclusive shopping and dining precinct known as Manuka. The waterfront suburb of Kingston sits to the east of the Manuka strip along Lake Burley Griffin, Forrest is located to the west, and Griffith to the south.
Price Range
According to data firm CoreLogic, 18 new Canberra suburbs surpassed a median price of $1 million in the year to June, taking the reported total to 27. Forrest, however, is so tightly held it often doesn’t register a median price through lack of sales. Of the few local homes which sold over the past year, the median was $2.7 million.
It’s a similar story in Kingston. After a recent A$1 billion redevelopment of Kingston’s foreshore, potential purchasers have more opportunity to buy into the coveted waterfront lifestyle close to Manuka’s shopping and dining precinct. Apartments and townhouses in Kingston have a $626,000 median for two bedrooms or $945,000 for three bedrooms—well over the Canberra apartment median ofA$470,000.
Photo: Luxury Portfolio International
Claire Corby, a broker with Capital Buyers Agency, said the Manuka-adjacent Griffith, where the median house price is A$1.82 million, was a suburb to watch.
“You can walk to Manuka village, you’re right in the thick of the action with great restaurants at the end of your street. If you’re buying something there at A$3 million today, you could quickly see that becoming A$4 million,” she said.
Photo: Luxury Portfolio International
Housing Stock
Suburbs in the city’s south are in high demand as they offer something many other Canberra suburbs can’t—heritage homes on large blocks with easy walkability to monuments, the lake, parks and prized schools.
Forrest, Griffith and Kingston are three of Canberra’s oldest suburbs, dating back to the original designs of city planner and architect Walter Burley Griffin. While both Forrest and Griffith feature many historic bungalows, Kingston’s redevelopment has made it one of the city’s more modern and high-density suburbs.
Photo: Luxury Portfolio International
“Buyers fall into two camps; they either want a slice of Canberra’s history, so they’re after established 1920s to interwar homes in these blue-chip locations. There’s a lot of history in those properties and they’re very scarce. With sympathetic renovations they’re perfect for investors, because they’re not making any more of those,” she added.
The other camp, according to Ms. Corby, is buyers seeking newer houses. “If they don’t find what they want, they’ll buy a rundown property in one of these established areas and bulldoze it to pop up a beautiful modern home.”
What Makes It Unique
Ms. Corby said Canberra is now on the map thanks to its value for money.
“People are looking to exit big cities, partially driven by COVID, and they’re looking at Canberra realizing it’s quite unique. Canberra has everything a bigger city has to offer, but it’s fairly low density with low traffic congestion. Our peak hour lasts just 30 mins,” she said.
Mario Sanfrancesco, sales agent with Blackshaw Manuka, said soaring prices in Sydney and Melbourne were filtering through to the capital.
“We don’t have the A$30 million to A$50 million sales they have, but you can buy those homes here for just A$10 or A$15 million. And that’s pretty special,” he said.
With Manuka’s popular village-style hub at the heart of these three suburbs, the neighborhood has maintained a sense of exclusivity. Given the historic significance of the area several public and private buildings, as well as ‘street furniture’ including the fire hydrants, kerbs and lights are under heritage protection.
Even the contemporary apartment buildings of Kingston have been restricted to a four-story height to maintain the integrity of the meticulously master-planned city.
Luxury Amenities
Famous for its exclusive boutiques, critically acclaimed restaurants and five-star hotels, Canberra’s inner south is a magnet for all things luxury.
Kingston Foreshore precinct is the place for an artisan shopping experience from renowned local photographer Scott Leggo’s gallery to the Canberra Glassworks, Australia’s only cultural centre dedicated to contemporary glass art. On Sundays, the Old Bus Depot Markets deliver gourmet food stalls to Kingston along with one-off fashion and handmade crafts. The gentrified neighbourhood also dishes up plenty of popular pubs, bars and restaurants including La Rustica, The Dock and Molto Italian.
Manuka Shopping Centre, predominantly on the Griffith side, is the go-to location for high-end jewellery, shoes, gifts and clothing stores such as celebrated Australian fashion designer Carla Zampatti. Locals flock to Manuka village on weekends for brunch at Urban Pantry or dine in at Belluci’s or multi-award winning Aubergine. A yet-to-be completed project will see the art-house cinema get a makeover and the arrival of a new five-star hotel.
Historic Manuka Oval, which is bustling with Australian Rules Football matches each weekend and the restored art deco swimming baths are also a draw, along with the high proportion of local parks and playgrounds.
Who Lives There
As Canberrans are tempted to upgrade with historically low interest rates, they are being joined by cashed up Sydneysiders, Melburnians and even returning expats seeking greener, lower-density pastures.
Eliza Owen, head of Australian research at CoreLogic, said Canberra’s highly paid professionals, who may be seizing the opportunity to upsize, were leaving their mark on the prestige market.
“Certainly high incomes and a tight labour market has contributed to Canberra’s very resilient property market performance throughout the year,” she said.
“If we look at some of these top-performing high-end suburbs in the capital they tend to have detached housing stock, pleasant leafy settings and—I suppose relative to Sydney—some semblance of affordability,” Ms. Owen said, adding that CoreLogic’s analysis revealed Canberra to be one of Australia’s most expensive capital city housing markets.
“However, when considered relative to incomes, it’s actually one of the most affordable,” she said.
Outlook
Regardless of the pandemic, Canberra is set to experience further house price increases.
“It’s just had an extraordinary growth story, and was virtually unaffected by the pandemic. Incredibly, June 2021 marked 23 months of consecutive record highs for the local dwelling market,” Ms. Owen said.
The top 25% of Canberra’s home price values was the strongest of any of the upper quartile house markets across Australia’s capital cities for the year, according to CoreLogic.
“Basically, this high-end segment of the house market across Canberra is a top performer. It’s grown by 24% over the year,” Ms. Owen said.
“We often talk about how this upswing has very much been concentrated in the high end of Australia’s housing markets, but it’s especially the case for Canberra,” she added.
Mr. Sanfrancesco said it is Canberra’s lack of volatility that places it in good stead.
“Historically we haven’t had the booms and busts that other cities have. We traditionally have had a gradual growth of values over time,” he explained, adding that supply would be the biggest challenge to the Canberra market moving forward.
“Up to the $4 million mark there are very few luxury homes for sale, but quite a depth of buyers,” he said. “If you’re a buyer looking to secure a place in Canberra I’d say jump right now if you can, because prices are just going to keep on going up.
Reprinted by permission of Mansion Global. Copyright 2021 Dow Jones & Company. Inc. All Rights Reserved Worldwide. Original date of publication: August 22, 2021
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This may be contributing to continually rising weekly rents
2 min
There has been a substantial increase in the number of Australians earning high incomes who are renting their homes instead of owning them, and this may be another element contributing to higher market demand and continually rising rents, according to new research.
The portion of households with an annual income of $140,000 per year (in 2021 dollars), went from 8 percent of the private rental market in 1996 to 24 percent in 2021, according to research by the Australian Housing and Urban Research Institute (AHURI). The AHURI study highlights that longer-term declines in the rate of home ownership in Australia are likely the cause of this trend.
The biggest challenge this creates is the flow-on effect on lower-income households because they may face stronger competition for a limited supply of rental stock, and they also have less capacity to cope with rising rents that look likely to keep going up due to the entrenched undersupply.
The 2024 ANZ CoreLogic Housing Affordability Report notes that weekly rents have been rising strongly since the pandemic and are currently re-accelerating. “Nationally, annual rent growth has lifted from a recent low of 8.1 percent year-on-year in October 2023, to 8.6 percent year-on-year in March 2024,” according to the report. “The re-acceleration was particularly evident in house rents, where annual growth bottomed out at 6.8 percent in the year to September, and rose to 8.4 percent in the year to March 2024.”
Rents are also rising in markets that have experienced recent declines. “In Hobart, rent values saw a downturn of -6 percent between March and October 2023. Since bottoming out in October, rents have now moved 5 percent higher to the end of March, and are just 1 percent off the record highs in March 2023. The Canberra rental market was the only other capital city to see a decline in rents in recent years, where rent values fell -3.8 percent between June 2022 and September 2023. Since then, Canberra rents have risen 3.5 percent, and are 1 percent from the record high.”
The Productivity Commission’s review of the National Housing and Homelessness Agreement points out that high-income earners also have more capacity to relocate to cheaper markets when rents rise, which creates more competition for lower-income households competing for homes in those same areas.
ANZ CoreLogic notes that rents in lower-cost markets have risen the most in recent years, so much so that the portion of earnings that lower-income households have to dedicate to rent has reached a record high 54.3 percent. For middle-income households, it’s 32.2 percent and for high-income households, it’s just 22.9 percent. ‘Housing stress’ has long been defined as requiring more than 30 percent of income to put a roof over your head.
While some high-income households may aspire to own their own homes, rising property values have made that a difficult and long process given the years it takes to save a deposit. ANZ CoreLogic data shows it now takes a median 10.1 years in the capital cities and 9.9 years in regional areas to save a 20 percent deposit to buy a property.
It also takes 48.3 percent of income in the cities and 47.1 percent in the regions to cover mortgage repayments at today’s home loan interest rates, which is far greater than the portion of income required to service rents at a median 30.4 percent in cities and 33.3 percent in the regions.
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