Budget woes may affect the strength of the property market in Canberra
While all states are likely to be impacted by the federal Budget introduced in May, Canberra may feel the deepest cut.
According to RP Data, the city was the worst performer of any capital over the past year.
Over the month of March, prices began to backslide, decreasing by 0.1 per cent over the period, according to data from the Australian Bureau of Statistics.
The Canberra market is heavily dependent on confidence levels within the public service. Indeed, according to data from the ABS, 21.2 per cent of Canberrans are employed in central government administration. Many more work for agencies, organisations and services that rely on public money for support.
The federal Budget announcement introduced plans to prune the public service workforce. According to Treasurer Joe Hockey, over 16,500 public servant positions are likely to be slashed. While the redundancies are spread throughout the country, Canberra is expected to be disproportionately affected.
Buyer’s agent Todd Hunter from wHeregroup warns these measures spell bad news for the ACT property market. He says large-scale job cuts are likely to push up vacancies and weaken the rental sector. As a flow-on effect, the sales sector may also see a correction in prices.
Weakened consumer confidence could also spook buyers, causing lowered activity across the city. Tom Duffy, the director of Canberra Property Buyer Solutions, says many of his clients are choosing to sit back and wait until the full effects of the Budget become clear before buying or selling.
Another risk in the market may be over-supply. Terry Ryder from Hotspotting.com.au says Canberra is a market “to be treated with caution”. While the nation’s capital used to deliver consistent results, an emerging surplus of apartments has de-stabilised values. He warns price growth is negligible and these trends are only likely to grow worse as a result of the Budget.
In more positive news, the Canberra market is one of the nation’s most affordable, according to a survey by HIA-CBA. Over the past year, the average household’s ability to afford mortgage payments has improved by 17.8 per cent.
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