Around $500k

High auc­tion clear­ance rates show that this “Ber­muda tri­an­gle” of sub­urbs has what it takes and will con­tinue to be a mag­net for en­try-level buy­ers

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In our more pop­u­lated cities $500,000 is en­try-level buy­ing, where at best your op­tion will be liv­ing on the outer fringes if you want a house or town­house with land. If you opt for some­thing a lit­tle closer in, you may have to re­side in a medium- or high-den­sity unit com­plex. In some of our larger re­gional cities, hav­ing $500,000 could get you into a mid­dle-mar­ket or even an up­mar­ket sub­urb.

Latham, ACT 2615 – houses

Latham is a sub­urb to the north-west of Can­berra. It’s a 20-minute drive into Can­berra cen­tral.

Prices for houses are typ­i­cally be­tween $500,000 and $550,000. They’ve risen by about 5% over the past 12 months and were pretty flat for the cou­ple of years be­fore that. But we don’t ex­pect this lack­lus­tre per­for­mance to con­tinue.

The hous­ing mar­ket in Latham topped the Lo­ca­tionS­core charts for June with a whop­ping 85. Over the past four months the Lo­ca­tionS­core has reached a three-year high.

One of the star­tling sta­tis­tics con­tribut­ing to this score is a very high auc­tion clear­ance rate of 97%. That’s one of the high­est in the coun­try for a mar­ket that has a de­cent num­ber of auc­tions.

And sup­ply is ex­tremely tight. The per­cent­age of prop­er­ties for sale at the end of June was only 0.28%. The Aus­tralian av­er­age was 1.33%. Half a per cent is con­sid­ered very tight.

Va­cancy rates are very low too at around 0.3%, which is a tenth of what is con­sid­ered nor­mal. The past two years have been par­tic­u­larly dif­fi­cult for renters.

Com­bine this with a ven­dor dis­count of 1.2% and you can see why sell­ers are lick­ing their lips while buy­ers scram­ble for scraps.

One mi­nor con­cern would be that the online search in­ter­est is not that flash. It’s been around 50 re­cently but off a low base of only 30. For a mar­ket like this we’d ex­pect it to be at least 100.

Charn­wood, ACT 2615 – houses

Charn­wood is the next best sub­urb in the $500,000 bracket and it’s right next door to Latham. The price range is a lit­tle lower but the re­cent growth is sim­i­lar.

The met­rics are pretty much the same as for Latham. This makes sense. We wouldn’t ex­pect the na­ture of the mar­ket to vary dra­mat­i­cally when the hous­ing stock and de­mo­graph­ics are so sim­i­lar across this area. The Lo­ca­tionS­core was 82.

Auc­tions are clear­ing at around 86%. Dis­count­ing is just over 1%. Va­cancy rates are ridicu­lously low, as is the stock on mar­ket. Even the move­ment in the Charn­wood met­rics is con­sis­tent with what has been hap­pen­ing in Latham.

Again, the met­ric of con­cern is the online search in­ter­est, which is only in the 50s. But ad­mit­tedly it has risen sig­nif­i­cantly in the past year.

Macgre­gor, ACT 2615 – houses

Macgre­gor is ad­ja­cent to both Latham and Charn­wood. The three sub­urbs form what could be called a “Ber­muda tri­an­gle” for buy­ers.

There’s no es­cap­ing the high de­mand and low sup­ply in this area. All three prop­erty mar­kets have very sim­i­lar met­rics. Macgre­gor’s Lo­ca­tionS­core was 81 for June. The re­cent his­tory of changes to the key met­rics is an­other ditto.

We of­ten credit mar­kets in a clus­ter like this with more po­ten­tial for growth than sub­urbs that are on their own. Iso­lated sub­urbs are ef­fec­tively pi­o­neer­ing growth for an area. That de­mand may be di­luted as buy­ers look nearby for eas­ier al­ter­na­tives. But when the neigh­bour­ing sub­urb is just as bad, buy­ers have nowhere else to go. Quite of­ten they sim­ply dig deep and pay more.

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