Why investors are still buying up properties in Canberra

The value of investor home loans in the ACT rose by 10 per cent in May compared to the previous month, according to the Australian Bureau of Statistics (ABS).

New investor home loans totaled $227 million in May, an increase from $205 million in April.

It's the highest monthly loan value since November 2023.

Belconnen single mum Monika Schmidt recently purchased an investment property in Wanniassa.

She plans to rent the house out short-term as part of her Airbnb rental business.

"I think [the market is] quite low at the moment, so I saw an opportunity to jump in before it's potentially going to keep rising," she said.

"I'm probably a little bit of a risk-taker, but I just think everything works out how it's supposed to.

"I don't know the south side very well, but with the figures that I've got access to for short-term rentals, it's a good place to buy."

Ms Schmidt said she paid $759,000 for the Wanniassa property, and intends to build a granny flat out the back that she will also let out for short-term rentals on Airbnb.

The property would also allow her to help her three sons get into the market themselves one day, she said.

Uncertainty about interest rates and the rise of inflation have dampened some views of the housing market, however Ms Schmidt was optimistic.

"In the worst case I could put it on as a [long-term] rental and it will just pay itself off," she said.

Frank Walmsley from Buyers Agent Canberra said investors were playing the long game in real estate.

He said there were two main factors encouraging investment.

"One is that interest rates will eventually come down, and the second thing is that the cost of land and development has gone up even while interest rates have fallen," he said.

"What people are basically doing is taking a long-term view about getting properties that can cover themselves as close as possible to the interest expense, factoring in that the market will pick up and the interest rates will eventually come down.

"There's good opportunities for development that people can, as Warren Buffett says, be greedy while others are cautious."

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Mr Walmsley said there was a lot of opportunity for buyers in the market, with low clearance rates at Canberra auctions.

Tax benefits in the ACT such as the deductibility of stamp duty in the purchase year also entice buyers, he said, as well as the undersupply of new homes in the ACT which typically results in high rental yields.