Crace ACT Property Investment

## 1. Investment Verdict We recommend a Buy for Crace, ACT, with the single most important number justifying this decision being the 3yr growth forecast of 13.5%. This indicates a strong potential for capital appreciation in the medium term.

## 2. Market Overview The median house price in Crace ranges from $995,221 to $1,100,000, while the median unit price is $527,134. The market is currently in a recovery phase, with a 1yr price growth of -3.8% and a 5yr CAGR of 2.4%/yr. The days on market are not available, but the vacancy rate is 2.0%, indicating a relatively tight rental market. This signals that buyers may face competition, while sellers may have an advantage in negotiations. The owner-occupier rate of 61% suggests a stable community with a mix of investors and owner-occupiers.

## 3. Rental Market The rental market in Crace is characterized by a median weekly rent of $740/wk, a gross rental yield of 3.1%, and a vacancy rate of 2.0%. The rental demand is high, with an unemployment rate of 2.8%. This indicates a strong demand for rentals, which is likely to support rental growth and reduce vacancy risk. Investors can expect a relatively stable rental income stream, with the potential for rent increases over time.

## 4. Short-Term Rental Opportunity The short-term rental market in Crace has a median nightly rate of $396/night and an occupancy rate of 52%. This translates to an estimated annual revenue of around $76,000 (assuming 365 nights per year and 52% occupancy). Compared to the long-term rental market, the short-term rental market may offer higher revenue potential, but it also comes with higher management costs and more variability in occupancy. Investors should carefully consider their investment goals and target market before deciding between long-term and short-term rentals.

## 5. Infrastructure & Growth Drivers Crace is located near several infrastructure projects, including the ACT Light Rail Stage 2A (under construction) and the announced ACT Light Rail Stage 2B (Woden). The suburb is also 3.4km away from the Gungahlin Place station, providing residents with access to public transportation. These infrastructure projects are likely to drive demand for housing in the area, supporting price growth and rental yields. The limited development pipeline, with supply growth outpacing new supply, is also expected to support price growth.

## 6. Bull Case If market conditions hold or improve, the upside scenario for Crace is significant. With a 3yr growth forecast of 13.5%, investors can expect strong capital appreciation over the medium term. Assuming a median house price range of $995,221 to $1,100,000, a 13.5% annual growth rate would result in a potential price increase of $134,000 to $149,000 over the next three years. This would represent a significant return on investment, making Crace an attractive option for investors seeking capital growth.

## 7. Risks While there are no significant risk factors identified for Crace, investors should still be aware of potential risks. The vacancy rate of 2.0% is relatively low, but it still poses a risk to investors if the rental market were to weaken. The supply pipeline is limited, but if new developments were to increase supply, it could put downward pressure on prices. The interest rate sensitivity is also a risk, as changes in interest rates could impact borrowing costs and demand for housing. However, with an unemployment rate of 2.8% and a strong rental demand, these risks are relatively mitigated.

## 8. The Play Investors looking to enter the Crace market should target an entry range of $995,221 to $1,100,000 for houses and $527,134 for units. A minimum yield of 3.1% should be targeted to ensure a reasonable return on investment. Watch signals include changes in interest rates, new infrastructure projects, and shifts in rental demand. The recommended strategy is to hold for the medium term, taking advantage of the expected capital appreciation and rental growth. With a strong growth forecast and limited supply pipeline, Crace presents an attractive investment opportunity for those seeking capital growth and rental income.

This analysis is for informational purposes only and does not constitute financial, legal, or investment advice. Seek professional advice before making investment decisions.