Investors in Canberra have had to grapple with something the ACT market isn’t used to: a possible crisis of confidence

As the political climate has been heating up in Canberra, a familiar sound has been heard among property circles. It’s a debate that routinely crops its head up from time to time, but it’s slightly different this time. It has grown teeth.

The argument is that the best and worst things about Canberra’s market are one and the same. The average household income within the nation’s capital is significantly higher than the Australian average, which means that investors can charge higher rents and, for the most part, get away with it.

Of course, this higher average income is greatly dependent on high paying Federal Government jobs, which is where Canberra reveals its vulnerable side. If the Federal Government starts cutting jobs, the once rosy situation for investors will start to turn. Average household income will drop, many people will be unable to afford their rent, and suddenly the rental landscape might change.

The current concern is not that things are any riskier than they were before. It is simply that recent political events have brought Canberra’s soft underbelly back into the limelight. The Labor Party in March suffered its worst ever defeat in the Queensland State election and also lost in NSW. It’s a ready indication that change could be a strong possibility at the national level, too.

When and whether this change in Federal Government would or would not result in job cuts in Canberra is something to be debated. What is more immediately clear is that the issue has re-emerged in the psyche of property owners. Would-be investors are asking questions and one has to wonder what this might mean for overall confidence in the Canberra market.

The most recent Property Council of Australia-ANZ Property Industry Confidence survey sheds some light. It reports that property industry professionals have, on average, a marginally negative view of the ACT’s economy and employment environment.

According to Paul Braddick, head of property research at ANZ, there’s enough to indicate that Canberra has some risks as it is.

“The government is now very much in cost-cutting mode… It doesn’t raise a lot of hope that we’re going to see significant increases in public sector employment. So the near-term outlook is reasonably subdued for Canberra,” he says.

Braddick states further in ANZ’s latest Australian Property Outlook that as the year goes by, Canberra’s supply situation may become less favourable for investors.