The ACT residential property market softened in the third quarter of 2008, with declining house prices, sales volumes, and rental rates. This was largely driven by changes in the ACT economy and job market, including a shift away from centralized government employment and increased use of short-term contracts, reducing demand. While the unit market saw some growth, prices and sales were expected to moderate due to economic uncertainty. The residential market outlook for 2009 was subdued overall due to declining population growth, though lower-priced housing segments benefited from first home buyer incentives and remained in demand.

1. Third Quarter 2008
© 2008, CB Richard Ellis, Inc.
www.cbre.com.au/research
ACT Residential
Hot Topics
Canberra house•
market softens
Canberra house•
rents retract
ACT building approvals fall•
Canberra unit market sees•
some growth
Canberra’s 2009•
residential market
The strong level of demand and low supply that
drove the Australian Capital Territory’s (ACT)
residential double-digit growth over the past 18
months has dissipated, resulting in prices and
sales volumes declining over the September
2008 quarter.
The Territory’s main contributors to economic
growth have been the Federal Government
and the defence industry, which together have
helped drive years of low unemployment and
property demand. These two industries are key
performance drivers of the ACT’s housing market
and therefore its growth or decline.
The public sector, however, has been earmarked
for spending reductions, which if it occurs will
have a negative impact on employment levels.
The government’s focus appears to be moving
from centrally administered plans in defence and
industrial relations to locally managed issues
such as housing, education, health, indigenous
affairs and the environment. A shift that is
likely to reduce the number of public servants
employed in the Country’s Capital.
Another change affecting the housing market has
been the introduction of short term employment
contracts replacing longer term offerings. This
encourages young professionals to relocate only
temporarily to the city and therefore only benefits
the rental market.
The combined effect of decentralised public
servant employment and short term contracts
appear to have filtered through to Canberra’s
residential market, resulting in a decrease of
sales volumes across the nation’s capital over
the past year.
Canberra’s median prices are significantly above
those in Adelaide, Brisbane, Hobart, and Darwin.
Due to its highly paid workforce, however,
Canberra in recent years has emerged as the
most affordable city in the nation - based on the
median house price relative to income levels.
At nearly $100,000 per annum, the median
household income of the ACT is 50% higher
than the Australian average. This means that the
mortgage commitments of ACT residents account
for approximately one quarter of their incomes,
one third less than the national average. Despite
this, the unsettled current financial and economic
conditions are contributing to a slowdown of the
residential market in the ACT.
Canberra’s population growth is sensitive to the
state of the ACT economy, and in recent times has
rapidly gone from above the national average to
below it. This is due to the well publicised easing
in job prospects, which has seen fewer arrivals
to, and more departures from the nation’s capital
than usual. This ease in population growth has
been a contributing factor to the Territory’s
decline in housing starts.
The four interest rate cuts since September
and October’s increase to the First Home
Owner’s Grant, appears to have injected
a year end confidence and stability into an
otherwise stagnant 2008. Canberra’s centrally
located lower priced areas have benefited with
increases in sales volume in the sub-$500,000
market whilst new residential estates and fringe
localities have had increased demand in the
sub-$400,000 market.
Land Development Agency’s OwnPlace
affordable land initiative is assisting in driving
growing demand in the lower sector of the
market. These dwellings predominantly comprise
two and three bedroom accommodation with
single garaging. Furthermore, there have been
a number of higher density residential unit
developments predominantly comprising one
bedroom, one bedroom plus study, and two
bedroom units. These have sold well off the plan
in the past six months with one development
having almost sold out with only four units
remaining as at December.
The middle and prestige residential markets
have remained stable with longer marketing
periods and price corrections in the order of
approximately 5% experienced by most. This is
evidenced particularly in the prestige unit market
with developments experiencing slow sale rates
and limited enquiry. It needs to be noted that
centrally located, good quality dwellings have
been and will continue to achieve good sales
results even in an uncertain market.
Market Overview

2. © 2008, CB Richard Ellis, Inc.
Page 2
Canberra House Market
The September 2008 quarter saw Canberra’s house market record further softening in
price and sales volumes. The September quarter recorded negative capital growth of 0.78%
producing marginal price growth since January this year of 2.57%. The median house
price of $464,000 for the September quarter is the fourth highest capital city median
behind Sydney ($571,000), Perth ($505,000) and Melbourne ($482,000). House sales
numbers in Canberra have fallen, tracking well below capital growth in recent quarters,
with a fall in sales of 7.7% in the last year to 4,944 compared to the year before. Between
the June and September 2008 quarters, house sales dropped 11%, a likely response to
current economic conditions and the change in government employment focus.
Canberra House Rents and Yields
Following a succession of rollercoaster quarterly rent results, Canberra’s median house
rent reduced by $10 per week over the September 2008 quarter. Canberra’s September
quarter median house rent of $410 per week places it third nationally, behind Sydney
($480 per week) and Darwin ($460 per week). Average housing rental yields in Canberra
are second only to those in Darwin, which has median gross yields in both its housing
and unit markets above 5%. Canberra’s rental yield of 4.61% and softening house prices
could entice long term investors and home buyers into the market. Given the government’s
change in employment focus and easing population growth, house rents are likely to
remain flat in comparison to Sydney.
ACT Building Approvals
Population growth in the ACT is easing and according to the Department of Treasury,
residential approvals in September 2008 were down 4% from the previous month.
From February to July 2008, monthly residential approvals increased consecutively, but
declined over the following two months to September 2008. During September, most
states experienced falls in building approvals, with New South Wales recording the largest
decrease (down 6.9%) followed by the ACT. The State and Federal government and the
Reserve Bank of Australia have introduced a number of factors that are likely to support an
increase in residential building approvals in 2009. These include the ACT Government’s
Affordable Housing Action Plan combined with residential land releases of 3,400 blocks
in 2007-08 and 4,200 planned for 2008-09, recent interest rate cuts, and the tripling of
the First Home Owner Grant for the purchase of newly constructed homes.
Jun
2005Sep
2005D
ec
2005M
ar2006Jun
2006Sep
2006D
ec
2006M
ar2007Jun
2007Sep
2007D
ec
2007M
ar2008Jun
2008Sep
2008
$0
$100
$200
$300
$400
$500
Weekly Rent ($)
3 Bedroom Houses
ACT Median House Rent
Source: Residex/CBRE Research & Consulting (as at Sept 2008)
ACT NSW NT QLD SA TAS VIC AUS
0
10
20
30
-10
-20
-30
-40
No. of Approvals
Monthly Change Annual Change
Residential Approvals
State/Territory Comparisons
Source: ACT Dept of Treasury (Sept 2008)
Sep
2002
Sep
2003
Sep
2004
Sep
2005
Sep
2006
Sep
2007
Sep
2008
$0
$100,000
$200,000
$300,000
$400,000
$500,000
Median Price
0
320
640
960
1,280
1,600
Sales (No.)
Median Price Houses No. of Sales
ACT Median House Price
and Sales
Source: Residex/CBRE Research & Consulting (as at Sept 2008)
House Market
No. of Sales
(year)
Median Price
(Sept Qtr)
Median Price
(last year)
% Growth
(last year)
Median
Weekly Rent
Rental Yield
(last qtr)
Chifley 41 $538,500 $457,000 17.77% $410 3.96%
Bonython 39 $471,500 $402,000 17.32% $405 4.59%
Dickson 41 $540,000 $465,000 16.21% $420 4.11%
Kaleen 105 $448,500 $387,000 15.87% $420 4.72%
Torrens 39 $529,000 $457,000 15.81% $375 3.88%
Canberra Houses 4,944 $464,000 $431,500 7.61% $410 4.61%
Source: Residex
Canberra’s Top 5 Growth House Suburbs – September 2008 Quarter

3. © 2008, CB Richard Ellis, Inc.
Page 3
Canberra Unit Market
The unit market’s strong growth in the last year of 11.2% is not likely to be sustained.
This is partly due to uncertain economic circumstances and the government’s
change in employment focus. Both factors are likely to reduce public service
growth in the nation’s capital, decreasing demand for housing and therefore
capital growth. A 2.09% increase in Canberra’s unit price over the September
2008 quarter produced a median unit price of $372,000, the highest unit capital
growth increase recorded over the quarter. This growth was largely driven by a
number of high priced sales in new unit complexes in South Canberra, boosting
the median price. The number of unit sales over the year to September 2008 fell
by 9.9% to just 3,082.
Sep
2002
Sep
2003
Sep
2004
Sep
2005
Sep
2006
Sep
2007
Sep
2008
$0
$50,000
$100,000
$150,000
$200,000
$250,000
$300,000
$350,000
$400,000
Median Price
0%
20%
40%
60%
80%
100%
% Change
Median Unit Price Capital Growth
ACT Median Unit Price and
Capital Growth
Source: Residex/CBRE Research & Consulting (as at Sept 2008)
Canberra Unit Rent and Yield
Canberra’s median unit rent dropped by $15 per week to $370 over the September
2008 quarter, partially due to an oversupply of units and diminishing demand.
The September quarter’s rental decrease contributed to an overall decrease of
11.9% for the year. Canberra’s average unit rental yield remains high in contrast
to other capital cities with Sydney (5.56%) and Darwin (6.13%), the only cities to
exceed Canberra’s 5.2% yield as at September 2008. It is believed Canberra’s
unit rental market is likely to experience further reductions in median rent over
the short term unless government focus changes significantly resulting in public
servant employment growth.
Jun
2005Sep
2005D
ec
2005M
ar
2006Jun
2006Sep
2006D
ec
2006M
ar
2007Jun
2007Sep
2007D
ec
2007M
ar
2008Jun
2008Sep
2008
$0
$100
$200
$300
$400
$500
Weekly Rent ($)
2 Bedroom Units
ACT Median Unit Rent
Source: Residex/CBRE Research & Consulting (as at Sept 2008)
ACT Residential Supply Pipeline
The Australian Capital Territory’s Indicative Residential Land Release Program,
released in April 2007, will inject approximately 15,590 additional dwelling sites
into the development pipeline. This program is intended to address the Territory’s
housing shortage and affordability issues with annual land releases ranging from
2,370 blocks to 4,200 blocks planned over the next five years. These releases,
combined with the Territory’s private sector developments, are expected to put
approximately 47,022 new residential dwellings and blocks into the development
pipeline. Across these 163 proposed projects/stages, the largest unit projects
are located in Canberra City while Molonglo and Weston will house the largest
land project (33,000 blocks) staged over the next 30 years. From November
2007 to November 2008, 65 projects had development applications lodged, 31
received development approval, 30 had tenders called or contracts issued, and
37 projects were under construction. Due to decreased demand and the current
financial and economic conditions, not all proposed projects are expected to be
constructed, with some likely to be deferred or abandoned.
1,233 1,102
1,308
1,620
870
4,208
2,702
2,938
3,370
2,370
1,600
1,500
1,300
1,000
1,000
2008-2009 2009-2010 2010-2011 2012-2012 2012-2013
0
2,000
4,000
6,000
8,000
LDA Estates
Govt Releases
Private Sector
Indicative Residential Land
Release Program
Source: ACT Government (April 2008)
Forecast
Unit Market
No. of Sales
(year)
Median Price
(Sept Qtr)
Median Price
(last year)
% Growth
(last year)
Median
Weekly Rent
Rental Yield
(last qtr)
Curtin 20 $264,000 $219,000 20.63% $290 6.75%
Charnwood 10 $302,500 $254,500 18.81% $350 6.33%
Macquarie 24 $355,500 $301,000 18.21% $365 5.65%
Cook 26 $368,000 $316,500 16.36% $380 5.60%
Banks 30 $338,500 $291,500 16.12% $370 5.67%
Canberra Units 3,082 $372,000 $334,500 11.21% $370 5.19%
Source: Residex
ThirdQuarter2008ACTResidential
Canberra’s Top 5 Performing Unit Suburbs - September 2008 Quarter

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CB Richard Ellis Pty Ltd ABN 57 057 373 574, Licenced Estate Agent, Level 26, 363 George Street, Sydney, NSW 2000 T 61 2 9333 3333 F 61 2 9333 3330
ACT Residential
The ACT residential market is expected to remain
subdued over 2009. This is largely due to a decline
in the population growth rates following a focus
away from employment in various government
and defence departments.
Uncertain economic conditions and financial
concerns could hinder some large residential
projects proposed for the Territory’s northern
regions. There are concerns that an oversupply
of properties priced above $450,000 could strain
the Canberra market in the short to medium term.
This follows proposed large land releases and
pricing above the first home buyer’s capability.
While Canberra’s overall market has slowed and
is likely to continue to do so in the short term,
dwellings priced at the lower end of the market
appear to be benefiting from the recent increase
to the First Home Owners Grant. Canberra’s
sub-$400,000 residential market appears to be
experiencing healthy buyer activity, as reported
by an affordable home builder whose waiting list
is far in excess of the number of terrace homes
available priced sub-$300,000.
Heading into 2009, providing the ACT economy
remains buoyant and job security is maintained,
demand for entry level products should remain
strong especially in the newer land estates. Areas
such as MacGregor West are reporting healthy
sales stemming from the increased First Home
Owners Grant and affordable housing policy. This
increase in Canberra’s lower end of the market
is likely to roll through to newer suburbs such as
Franklin, Bonner and Casey One in 2009.
Canberra’s unit investors, who typically purchase
within a 5km radius of the City, are likely to see
good opportunities appearing in the market over
the next six months. A combination of declining
sales volumes and hesitant developers could
result in price adjustments and incentives on offer.
Canberra City’s well paid population is likely to be
able to retain the area’s high rent and attractive
yields over the short term, supported by a vacancy
rate of 2%.
Canberra’s middle tier or mortgage belt housing
market could see continued slowing in the outer
suburbs in 2009. Whereas, inner city suburbs with
houses priced up to $500,000 may see some buyer
activity over the next six months as those who do
purchase choose to do so closer to the CBD.
Like many capital cities at this time, houses priced
over $1.5 million have experienced a remarkable
slowing in demand and easing of price. Canberra’s
outer top end housing market is likely to be no
different, with buyers shying away from expensive
new homes in recently developed estates and
heading closer into the city. Inner Canberra
suburbs with median house prices over $1 million,
such as Deakin, Red Hill, Forrest, Griffith and
Yarralumba, are the most likely buyers’ picks at
this end of the market, as established suburbs
are often preferred over newly developed areas
further from the city.
It is projected that growth will be substantially
more subdued over the next six months. Looking
further forward high rental yields may stimulate the
interests of Canberra investors. A further lowering
of interest rates should also assist in stabilising
Canberra’s residential market.
Market Outlook Local Offices
CANBERRA
Level 4,
92 Northbourne
Avenue
Braddon ACT 2612
GPO Box 1987
Canberra ACT 260
T 61 2 6232 2733
F 61 2 6232 2730
For more information regarding the
MarketView, please contact:
Toni McKnight
Senior Manager, Residential
CB Richard Ellis (C) Pty Ltd
ABN 64 003 205 552
Level 33, Waterfront Place
1 Eagle Street
Brisbane QLD 4000
T 61 7 3833 9773
F 61 7 3833 9830
toni.mcknight@cbre.com.au
Tom Edwards
Regional Director
Residential Mortgage Valuation Services
M 61 408 787 880
thomas.edwards@cbre.com.au
Marcus Hon
Associate Director
Valuation & Advisory Services
M 61 409 308 687
marcus.hon@cbre.com.au