Strong economic performance could support ACT property market
CommSec “State of the States” highlights ACT as the national winner in 4 out of 8 key indicators of economic performance!
How are Australia’s states and territories performing? Each quarter, CommSec analyses eight key indicators: economic growth, retail spending, business investment, unemployment, population growth, construction work done, housing commencements and dwelling finance. These indicators have a strong influence in how property markets perform. The ACT property market is likely to have a strong performance based on CommSec’s analysis.
Just as the Reserve Bank uses long-term averages to determine the level of ‘normal’ interest rates; CommSec has done the same with key economic indicators. Latest readings for the key indicators were compared with decade averages for each state and territory – that is, against the ‘normal’ performance. The State of the States report also includes a section comparing annual growth rates for each key indicators across the states and territories, as well as Australia as a whole. This enables another point of comparison in terms of economic momentum.
A summary of the key findings can be found below:
- Economic Growth – Up 24%, only behind NSW
- Retail Spending – ACT’s annual growth of retail trade is strongest at 3.3%
- Business Investment – Up 15.8% in spending on new plant and equipment
- Unemployment – Second lowest unemployment rate in AU with just 3.7%
- Construction Work – ACT tops the list of annual growth rate of construction (to December 2016 ) at 27.5%
- Population Growth – Up 1.47%, second only behind Victoria
- Housing Finance – ACT tops the report with 21.4% growth in real estate activity, housing construction, and activity in the finance sector
- Dwelling Commencements – ACT finishes first with annual growth to dwelling starts up 22.9%
Total property price growth expected from 2017 to 2020. Photo- BIS Oxford Economics
KEY INVESTMENT DRIVERS
- Canberra has one of the strongest and most secure economies in Australia
- Strategically situated between Australia’s two major cities Sydney and Melbourne, Canberra is also linked to the fast-growing Asia Pacific region
- Canberra boasts innovative companies, a diversified workforce, world-leading universities and cutting-edge research institutions
- It is home to the Australian headquarters of many multinational corporations and the Australian Federal Government
- ACT’s long-term economic growth tracks at around three per cent for each of the last five years
- Flight times to Australian state capital cities are short, positioning Canberra well as a head office location: Sydney 50 minutes; Melbourne 70 minutes; Brisbane 100 minutes; Adelaide 75 minutes
- Population is estimated to increase 1% year on year through to 2050
- Construction of the Canberra Metro, a light rail system delivering jobs and a truly integrated transport system
PROPERTY MARKET
Canberra is often overshadowed by Sydney and Melbourne when it’s come to housing growth coverage. However, it has consistently been a long-term performer for capital growth and rental yield
- Vacancy Rate: Super tight at 1%
- Affordability: Excellent, only 18% of incomes going towards mortgages
- Unemployment Rate: 3.7%
- Population Growth (2011 Census): 3%
The latest data indicates a multi-speed national economy. The report is a must read for any serious property investor. Download CommSec ‘State of the States’ April 2017.
For more information on how you could invest in the ACT property market, call us on 1300 655 899 or contact us by email.
This article is provided for general information only and does not constitute personal advice, as it does not take into consideration your personal circumstances. Please consult a licensed tax or financial advisor before making any decision to invest.
Image courtesy of dickson-central.com.au