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The culling of more than 1,200 public sector jobs in the next financial year on top of significant job cuts last year could pull the rug out from under Canberra’s property market, according to Australian Property Monitors’ Andrew Wilson.
“Given what’s happened in the Budget [this week], there’s really no blue sky ahead for [Canberra’s] market in terms of increased activity in the public service,” Dr Wilson told Smart Property Investment.
“With cost cutting and public sector services being looked at very carefully, I think there’s going to be a continuance of that reduction in economic growth or economic activity in Canberra which will work its way through into the housing market.”
According to ACT Opposition leader Jeremy Hanson, almost 3,000 jobs were lost in the six months to December 2012, with the full extent of the job cuts unclear.
The ACT’s high unemployment rate, currently sitting at 4.6 per cent, according to the Australian Bureau of Statistics, was identified as one reason for the stalling of house price growth.
Dr Wilson said the recent rate cuts are, however, not enough to drive the market.
“Nothing impacts a housing market more than unemployment. There’s not much you can do with low interest rates if you don’t have a job,” he said.
“You’re [caught] between a rock and a hard place. House prices are rising, interest rates are low, but you still [need] a deposit to move in.”
However, it’s not all doom and gloom.
David Woolford, managing director at Cushman & Wakefield Australia, applauded the federal government’s commitment to infrastructure investment, adding that it’s a positive for the property sector. However, the benefits might come at the expense of opportunities elsewhere.
“On one hand we commend the government for pushing ahead with an array of important infrastructure projects in cities and regional locations in the face of a significant deficit; on the other we are concerned about the long-term timing of some of these projects,” Mr Woolford said.
“Additionally, it is a concern that a corresponding commitment to improving housing supply was not apparently forthcoming.”
As the housing market is a critical driver of the broader economy, Mr Woolford believes the ongoing issues of housing and affordability need to be addressed.
Budget is defined as the estimation of expenses made over a specified time for the purchase of goods or services.
Unemployment occurs when a skilled worker or a professional who wants to work is unable to find jobs.