Canberra prestige homes taking six months to sell: CBRE

Time on market for prestige houses and units in the ACT has blown out due to an oversupply of properties, according to CBRE’s latest market assessment.

Properties priced between $500,000 and $1 million are taking between two and six months to sell, while those priced above $1 million are taking between three and six months to sell.

As a result, the prestige ACT market is now a buyer's domain, according to CBRE’s ACT Residential Marketview for the second quarter of 2011.

Prestige sellers in the outer suburbs of Canberra are particurlarly struggling, CBRE associate director for valuation and advisory services, Marcus Hon told Property Observer.

Prestige units are taking longer to sell than prestige homes due to an oversupply of properties.

“Asking prices are staying put. But units that would have taken one or two months to sell are now taking four months to sell,” he explains.

According to Mr Hon, realistic pricing has become very important in the prestige sector to stimulate genuine buyer interest, given the current level of buyer caution.

But strong conditions remain in the investment market, with off-the-plan sales exceeding expectations.

“There has been speculation that the minimal 5% outlay has been the persuasive factor in getting potential purchasers to commit to residential projects,” says CBRE global research and consulting manager Sam Reilly.

“However, this has created a degree of risk as over 1,000 settlements are due to occur in the next two years.”

The prestige market remains strongest in suburbs closest to Canberra where there is limited supply with Hon noting good levels of inquiry in the inner north and southern suburbs.

There have been some exceptions.

According to Mr Hon, a prestige home in Nicholls, Gunghahlin, sold recently for $1.6 million.

Gunghahlin was recently the site of the biggest land sale of the year in the ACT with a 35-hectare site selling in June to the Village Building Company for $36.25 million in an auction that attracted bids from 11 local and interstate companies.

The ACT housing market remains strongest for properties priced around the RP Data median price of $483,750.

CBRE says buyers and sellers are well-matched in the entry level house and unit market, where properties are priced around $500,000.

While CBRE has noted “reasonable levels of enquiry” in this price bracket, a buyers’ market has emerged for properties above this mark.

Overall, the ACT residential market has bucked the national trend of falling housing prices despite its economy forecast to underperform relative to the national economy up until 2015.

Deloitte Access Economics forecasts growth per annum of 2.5% over this period.

While buyer demand has declined across all sectors in recent months, this had not translated to negative corrections in capital values, indicating a good level of resilience in the market.

“While the general slowdown that has impacted the Australian residential sector is now evident in the ACT, this market has avoided the price falls that have been experienced across some of the other major markets, notably Perth and south-east Queensland,” says Reilly.

“As the biggest employer, the government keeps things going. Government spending has an immediate flow through to employment,” he says.

“There has been no talk yet of spending reforms.

“It is difficult to get reforms passed given the current government. If we had a majority government, there might be more speculation about reforms.”

“As is always the case in the ACT, government spending measures will remain critical to the future performance of the market. Given the lack of substantial reforms or announcements in this area the outlook is stable in the medium term.”

Reilly says the Gunghalin Drive extension, ASIO building construction works and the Woden Green precinct development have all had a positive influence on surrounding areas.