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The recent sale of four greenfield residential development sites may aggravate the oversupply of property in Canberra, a leading property adviser has warned.
Development sites worth almost $19 million were sold in the capital last week. The sites were zoned for mixed-use, apartment and multi-unit development.
Tony Barber from Prosperity Property Advisors told Smart Property Investment the Canberra market is already experiencing an imbalance between supply of property and buyer demand.
“The population is flat and the market is tracking sideways,” he said.
“Releasing more land at this point in time is going to, if not flood, then oversupply the market."
He believes public service cuts, low population growth and uncertainty in the wake of the election have dampened buyer activity in Canberra.
A report released by QBE and BIS Shrapnel in October 2013 predicted the oversupply in Canberra would continue for at least the next three years.
“With public sector employment likely to decline in the short term as the new federal government looks to reign in costs, the lower employment growth will result in reduced migration, which in turn will prevent the oversupply being rapidly absorbed,” the Australian Housing Outlook report stated.
The report showed that dwellings in Canberra currently exceed demand by 2,500 properties, a discrepancy which is expected to grow to almost 5,000 properties by 2016.
However, Mr Barber acknowledges there may be benefits to an increase in new development.
“It’s going to put more pressure on developers to renegotiate and drop their prices,” he said.
“Canberra needs a bit of a shake-up in that line. It’s a bit overpriced compared to the rest of the country.”
A greenfield development refers to the real estate construction project on a previously undeveloped parcel of lands such as agricultural fields, forest lands, and others.