Worries over ACT’s unit market and employment picture cast shadows over the nation’s star property market
The nation’s capital has been the star performer over the year but several worrying signs have analysts now playing wait-and-see.
Through a year marked by economic uncertainty that has roiled many of the nation’s other major markets, Canberra’s main saving grace has been its ties to a stable and generous employer – the Federal Government. But now, with more than 4,000 Federal job cuts scheduled through the newly released Federal budget, Canberra’s employment market is seeing some of the most significant clouds since Liberal government cuts last decade.
Angie Zigomanis, with forecasting firm BIS Shrapnel, expects housing to take a hit, though he does not expect the cuts to dig quite that deep this time around. “They’ve enjoyed a pretty buoyant period where Federal Government coffers were pretty full and employment was pretty strong,” he says.
“From here on in it is really a matter of what the belt tightening looks like. I suspect it won’t necessarily be as tough as what we saw back when the Liberal government came into power but you can expect that it will have some sort of negative effect as people are worried about their employment prospects.”
Zigomanis says the other key worry on the horizon for the Canberra market is a possible oversupply in the unit market, where his firm sees a glut of apartments coming online in the coming year.
“ACT, from a construction point of view, has performed fairly strongly over the last couple of years,” he says. “Most of those apartments are still waiting to be completed, and as they progressively become completed there is probably a question mark as to whether they can be filled or not.”
Canberra’s rental market has continued to perform relatively well recently, posting 5% growth in median rent for the year ending March 2012. But Zigomanis worries the combined effect of employment concerns and the new apartments could spur downward pressure on rents – and consequently on prices – in the unit market.
Moderate growth pegged
Despite these signs, Australian Property Monitors economist Andrew Wilson says he does not expect the budget to make a significant dent in the region’s overall employment picture, and therefore sees a brighter year ahead for the region’s property market.
“Canberra certainly has moderated through along with a lot of the other housing markets but I’d certainly suggest that with interest rate falls it is still a pretty good bet to record some growth this year, though I’d suggest moderate growth.”
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