Market may be more resilient than credited
Grim speculation about wide-scale cuts to public service jobs have haunted Canberra for months. But should cuts happen how will they really impact on the city’s property market?
The first cut is the deepest – and leaves lingering scars, advises the lyrics of Cat Steven’s 1967 hit. Having once suffered through John Howard’s public service jobs cuts, could this be the case for Canberra and its public service corps?
Colliers International’s Paul Powderly says speculation over potential cuts to public service jobs keeps harking back to the Howard cuts of 1996. Yet any cuts are not likely to be on the same scale or have the same impact as they did some 20 years ago.
The former Labour government shed many more jobs than previously thought prior to the election which should impact on future cuts, he explains. Also, not only is the bulk of the city’s workforce not actually in the public service, but public service jobs are spread around the country. For this reason, Powderly believes that, while more jobs will be cut, it is not the loss of jobs that will impact on the city’s property market – rather it is the ongoing negative speculation’s effect on confidence which will.
The market will be pretty steady overall, Powderly says. “I don’t think there will be any dramatic rises or falls. It will just continue to be steady as she goes. But the last 12-18 months have been pretty bad for the Canberra/ACT market, so any growth is likely to be moderate.”
Certain markets within Canberra remain highly competitive, largely due to supply and demand issues, he adds. “If you look at the markets in Belconnen
, Woden and Molonglo, there is a lot of competition between developers to sell stock. This means it is possible to negotiate and get good deals.”
BIS Shrapnel’s Angie Zigomanis has a different outlook. He says cuts to public service jobs will have a very negative influence on the Canberra/ACT property market for the next few years.
“It is a transient market. People tend to come in to the state for a few years for work and then leave again. That means there is a sizeable rental market. And that would be hard hit by any cuts to the public sector.”
However, Powderly says that, over the long term, the Canberra/ACT market has good, constant capital growth prospects. “Also, properties in Canberra will continue to be a good investment because they are of particularly high quality in terms of standard and finish.”
Several other commentators have also noted that Canberra/ACT’s prospects for investors may not be as bleak as posited. They say the rental market is returning good yields, that the city’s middle and outer-ring suburbs are comparatively affordable, and that its quality and heritage suburbs are often underestimated.
Suburb to watch
Chapman is the southern suburb of Canberra that’s currently experiencing solid resurgence, according to RP Data figures. The small locality, which backs on to the Bullen Range Nature Reserve and a number of other park and forest areas, defied the general slow trend of Canberra prices and surged 9% in 2013. Usually quite steady, Chapman maintained an average annual growth figure of around 6%, and in the most recent quarter has gained another 2%.
Strong growth potential and a solid rental market make Chapman an attractive option for investors. The most sought-after streets are Chauvel Circle and Monkman Street, in the southwest corner of the suburb, which are elevated, on large blocks and have mountain views.
Families are attracted to this area because of the proximity to infrastructure and to the Cooleman Court Shopping Centre. It is also well serviced by buses and is close to the Parkway, which is the main road that will get you to Canberra city within 20 minutes.
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