Political uncertainty has seen the ACT adopt a ‘wait and see’ attitude: will property prices depend on the success of the new government?
The political centre of Australia’s federal government has seen interesting times recently politically – and that’s had an effect on the property market.
Election campaigns always produce a ‘wait and see’ effect: however, in a city like Canberra – where a significant proportion of the workforce is directly employed by government, and the remainder depends upon those employed by government – the result is much more pronounced.
Add to that the protracted period of uncertainty following the election result, as both major parties negotiated with independents to try and form a minority government, and you’ve got a recipe for a stagnant market.
Gerard Tiffen, director of Tiffen & Co and one of Mortgage Professional Australia’s top 10 brokers for 2010, reckons that’s exactly what’s happened. “The market totally came off the boil for eight weeks or so, and it’s still slow,” says Tiffen. “Real estate agents saw a significant downturn in people coming through exhibition homes – before you’d have 20 couples, but it’s been down to just two or three. Stock levels are increasing, too, as is the time on market: while previously this averaged around 45 days, now it’s blown out to 60 or 70 days.”
That’s consistent with what Tiffen has seen in terms of demand for mortgages. “While the volumes of mortgages we’ve been arranging hasn’t dropped as significantly, the purpose has changed,” he adds. “We’ve seen a lot more people refinancing with the intention of renovating or extending their properties, rather than for new properties or upgrading.”
Even so, it appears that the Canberra market’s stagnation hasn’t translated into a fall in prices. In fact, the latest Residex figures show Canberra racking up the largest growth in median house price during the August quarter – up 3.29% to $533,500. In the last 12 months, Canberra notched up the second-highest increase in median house price – up 10.51%.
RP Data’s senior research analyst, Cameron Kusher, reckons growth will continue to return – but that buyers should not expect stellar returns due to the market transitioning from a period of strong growth to a “relatively flat” period. Tiffen agrees – but cautions that continuing political instability could keep the brakes on the market.
“October usually sees the market pick up, and more stock is likely to come into play,” he suggests. “There’s the potential there for a good buyer’s market, as I expect there to be fewer people competing for properties.”
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