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1. Blackshaw Projects
Market Snapshot
November 2021
Canberra off-plan
property

2. Welcome to Blackshaw Projects’ November
2021 market snapshot reviewing off-plan
property in Canberra.
Market sentiment
During October there was an increase in the number of properties listed for sale
which can be attributed to restrictions relaxing, permitting open homes and
on-site auctions. Data from SQM Research showed the total number of listings
in Canberra during September 2021 was 2,263, increasing by 26.5% in October
2021 to 2,862. Year-on-year there are 31.3% fewer properties for sale as the total
number of listings in October 2020 was 4,167.
Sydney and Melbourne saw a surge in listings causing media to start reporting
softer conditions in those markets. Taking a longer-term view explains softer
conditions in those markets. Over 24 months Sydney had 2.65% fewer listings,
however in Melbourne the total number of listings increased by 14.24%. During
this time property values have risen significantly which is why more properties
being listed has caused those markets to soften.
Property values in Canberra have also experienced robust increases, however
there is a chronic undersupply of listings for sale. During the last 24 months
there are 36.8% fewer properties for sale. This explains why the market has
comfortably absorbed price increases, and I anticipate will continue to do so for
some time.
Buyers are typically taking an optimistic view on the market and quickly become
educated the limited opportunities available are selling quickly. Our team is
finding the most qualified prospective purchasers have been actively looking for
approximately four weeks.
Interestingly, these purchasers are coming back and buying into projects they
had initially ruled out. In the time between initial inspection and making their
decision to buy, sales velocity could trigger multiple price increases, resulting in
purchase prices being considerably higher than on initial inspection.
Our sales processes have adapted to changing buyer behavior. We have
implemented critical follow up procedures and automated touch points to
ensure the projects developed by our valued clients are front of mind throughout
the buying journey.

3. Project: The Residences, Turner
Client: HTI Group
No. dwellings: 107
Background: The Residences is the final stage of Mid/Town precinct in Turner.
Eight commercial spaces on the ground floor had been designed with intention
of increasing resident amenity. This project initially comprised 90 apartments
in a mix of one, two and three bedroom floor plans. Unit mix skewed towards
larger floor plans targeting live in owners with a small number of one bedroom
properties without parking targeting either investors or price conscious buyers.
The Residences launched in October 2020 and initially failed to generate
traction. First home buyers and upgraders who were most active across the
market at the time weren’t initially attracted to the project. Other projects in the
area were selling well indicating the unit mix had missed where the market saw
value.
Our team worked with HTI Group to re-design two of the three bedroom floor
plans on each floor to create smaller properties we could sell at a lower price
point, while achieving a higher price per square metre. The Residences was re-
launched in March 2021 and immediately generated strong market traction. First
home buyers and investors bought each of the updated unit types within a few
weeks. Display suite open for inspections went from attracting less than three
groups per day to 15+ per day creating sufficient interest and urgency to sell
down the balance of unit types.
This result demonstrates the value of sales teams not being wedded to an
outcome and being comfortable identifying challenges and proposing solutions
for developers to evaluate. Would prevailing market conditions eventually have
created enough demand to sell out The Residences? Absolutely, however we did
not have sufficient conviction this would happen at the time given other risks
such as COVID-19 transmission shuttering major cities across Australia.
The Residences has now sold out prior to construction commencement.
Case Study

4. Sales Volume - Per Month
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Month No. Sales Value
January 1 $600,000
February 22 $12,365,400
March 37 $20,943,200
April 14 $7,462,800
May 33 $17,883,800
June 53 $28,986,462
July 48 $22,157,920
August 45 $21,562,950
September 38 $17,917,800
October 27 $13,480,000
November 13 $7,166,100
December - -
Total exchanged sales 331 $170,526,432
Running sales yet to exchange 69 $33,975,000
Total 400 $204,501,432
Current Sales Rates - Per Month
Sales Value - Per Month

5. Project August September October
Apartments
Molonglo Falls, Coombs $6,775 $6,890 $6,803
SkyHaus, Taylor $6,266 $6,360 $6,405
The Residences, Turner $7,102 $7,750 $6,725
Norrebro, Watson $6,044 $6,166 $6,034
Townhouses
The Connery, Strathnairn $5,307 $5,675 $5,682
Extra, Taylor $5,402 $5,402 $5,525
Marketing Price Indicators
The Residences, Turner
Price M/2: $6,725
The Connery, Strathnairn
Price M/2: $5,682
Molonglo Falls, Coombs
Price M/2: $6,803
Norrebro, Watson
Price M/2: $6,034
SkyHaus, Taylor
Price M/2: $6,405
Extra, Taylor
Price M/2: $5,525

6. Agent Insight - Property Values
Recently the cohort of property market analysts have started chirping
pessimistic views on the trajectory they see values heading. Consensus seems to
be for modest growth in 2022 followed by property values declining in 2023.
It is inevitable property values in Canberra will eventually see slower growth rates
and experience times where values decline, but in my opinion multiple factors
will provide tailwinds for property owners in Canberra for some time.
Immigration, overseas investment, employment, strong rental yields and positive
market sentiment are forces supportive of continued growth. According to Real
Estate Institute of Australia data, the ACT is the second most affordable state
or territory to own a property. This is calculated by the portion of weekly family
income devoted to mortgage repayments.
Whilst prices may seem high, they remain affordable which has long been part of
the underlying strength in Canberra’s market. This will insulate ACT households
against rising interest rates as homeowners have capacity in household budgets
to re-allocate funds currently used for entertainment or travel to their mortgage
repayments.
Australian Bureau of Statistics new dwelling approvals data is quite lumpy on a
month-to-month basis making it important to take a longer view.
Comparing the two years to September 2021 and the corresponding period
to September 2019 there were 19.07% fewer units approved and 44.99% fewer
houses approved. The total number of new dwellings approved is down 26.44%,
leaving Canberra in a chronically undersupplied state.
Few opportunities for development combined with inefficient planning approvals
processes appear unlikely to be able to make a meaningful impact increasing
new supply prior to 2024.
Canberra has proven itself a global leader in vaccination rates and management
of the COVID-19 pandemic.
Skilled immigrants will be attracted to Canberra shortly after international
borders open, I anticipate strong overseas migration to Canberra over the
next 24 – 36 months due to people being attracted to the lifestyle and strong
employment prospects of securing a high paying job.
Investors have literally been arriving in Canberra by the bus load to park their
money in what they perceive to be the strongest investment market nationally
due to our historically low vacancy rates and high rental yields.
Wage growth driven by competition to attract and retain workers will act as
another buffer for household budgets to absorb interest rate rises. Government,
professional services, and construction industries represent the majority of
Canberra’s workforce.
Higher wages has the same effect as lower interest rates. Both increase the
amount of money buyers can borrow for their property purchase and both
improve the amount of cash in household budgets.
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Oct 2017 - Sep 2019 Oct 2019 - Sep 2021