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Australia’s next booming city revealed

13 JUL 2020 By Cameron Micallef 6 min read Investor Strategy

Massive economic incentives and business recovery programs are likely to be tailwinds for an Australian capital city, according to new research.

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Figures released by property expert John Lindeman show that Canberra is likely to thrive while many other cities in Australia could fall due to the COVID-19 pandemic.

The property expert highlighted how Canberra’s 30,000 businesses benefit directly from federal government procurement decisions and programs, which often increase during economic downturns.

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“Government administration produces nearly one-third of the Australian Capital Territory’s economic output and indirectly accounts for over 40 per cent of its workforce, so whenever the number of public servants in Canberra increases, housing demand grows there as well,” Mr Lindeman said. 

According to Mr Lindeman, Canberra’s public sector workforce is also likely to help investors who are seeking a positively geared property as record-high government employment only continues to grow in the coming years.

“Because most of the new public servants will be on short-term contracts, they may only initially intend to reside in the national capital for a few years,” Mr Lindeman said. 

“This means that they will prefer to rent well located, well-appointed low maintenance dwellings rather than buy a property, and they will also prefer to live in units because of Canberra’s bracing climate.”

He highlighted the most popular suburbs for unit renters are located in the entertainment precincts of Civic, Braddon and NewActon, with renters enjoying the shopping cafe, restaurant and nightlife experience.

Rental demand is also likely to be concentrated along the recently completed Canberra Metro light rail route, from Gungahlin to the city centre.

“These suburbs offer positive cash flow investment opportunities from day one, with the highest genuine rental yields available in any of our capital city unit markets,” Mr Lindeman said.  

“Such high yields will attract investors seeking cash flow, and with the competition from investors likely to exceed the supply of available units, prices are likely to rise as well.”

Despite having a large number of government workers who are temporary to the city, Mr Lindeman also shared how shifting attitudes towards Canberra is seeing some residents stay put.

“Many of Canberra’s new residents will decide to stay and make Canberra their permanent home, and as they gradually move out of rental accommodation, they become first home owners,” he said. 

“This means that the demand for housing in Canberra continuously shifts from rentals to home buyers, so if the number of renters keeps rising as forecast, then home buyer demand will rise as well. As a result, Canberra could soon become the city with Australia’s highest house and unit prices.”

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