Property prices could fall by as much as 18% if the Federal Government decides to put a cap on growth in Australia’s major cities, warns the Urban Taskforce’s People Power report.
The government’s sustainable population strategy has suggested that certain areas have reached their ‘carrying capacity’, particularly Sydney, Melbourne and Southeast Queensland.
The Urban Taskforce report however, which was prepared by MacroPlan’s property economists, predicts that a cap on population growth could see property prices crash by 18.3% in Sydney, 15.3% in Melbourne, 14.7% in Brisbane, 12.6% in Perth and 6.6% in Adelaide.
Urban Taskforce chief executive Aaron Gadiel warns that the government has the power to cut population growth in our major cities by preventing new home construction, restricting new infrastructure investment or stopping immigrant settlement.
“But if the government uses those powers our cities, our communities and our national economy will suffer enormously,” he cautioned.
“With our ageing population, if a city’s population is to remain static its workforce would need to decline to offset the rising number of people reaching retirement age.”
“The loss of workers would hit household income, which would feed in to lower property prices.”
The report also predicts that a population cap imposed across Australia’s five biggest cities could reduce national income by $5,000 per capita within 10 years.
“It’s time to stop talking down our major cities,” said Gadiel.
“Our cities face challenges, but those challenges should be addressed with more investment not with a closed door.”