By Bob Wilson, 17th October 2008
Investors who bought into the ACT's Woden Valley 10 years ago have done very well.
The region's median house price has soared from just over $100,000 in 1988 to $600,000 as at 1 January 2008. Home owners enjoyed a 32.5% increase between 2006 and 2007 alone.
And it's not over yet. Economic forecaster BIS Shrapnel says Canberra house prices will rise about 15% over the next three years, with a 15% to 20% rise in rentals over the same period.
PRDnationwide's study of 11 Woden Valley suburbs shows annual house price growth of between 7.5% and 16.5%, (although the suburb of O'Malley suffered a 3.2% price decline from a high of $747,000 in 2002 to $635,000 in 2007). Strong demand has been based on Woden Valley's proximity to Canberra's CBD and employment opportunities.
Households are relatively well off, with a median weekly income of $1,471, with 38% of households earning between $1,000 and $2,000 per week. Median monthly home loan repayments are $1,517, so home owners seem well placed to afford the prices being asked in suburbs such as Pearce, which had the biggest annual price increase and now has a median house price of $728,000.
Only one Woden Valley suburb in this study (Lyon) has a median house price below $500,000 (in this case $490,000). The median price in the other 10 suburbs ranges from $530,000 (Mawson) to $884,000 (Isaacs).
Little wonder there has been a dramatic increase in the number of units built in the Woden Valley over the past decade - units now comprise 30% of all dwellings. The unit market is the source of affordable housing in this area.
There was major growth between 2001 and 2003, when the median price grew from $156,000 in December 2001 to $290,000 in December 2003 (an average 36% per annum). There was another growth spurt in 2007, with the median price of $300,000 in December 2006 increasing 23% to $369,500 in December 2007.
Unit sales volumes have remained steady, with 320 units sold during calendar 2007. The majority of units sold in the $300,000 to $400,000 price band, with only 7% selling for more than $600,000. The most popular units are those close to major shopping centres or on public transport routes.
The Woden Valley's housing market now appears to be at capacity, with no major areas available for large scale residential development. This factor alone should keep upward pressure on the value of existing houses and units.
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