The ‘axeman’ cometh
Tony Abbot’s plans for large-scale public sector cuts were always going to have an effect on Canberra property values, but how deep will the blade be felt?
When Tony Abbot was sworn in as Australia’s 28th prime minister in September, it didn’t take long for the media to start branding him “Axeman Abbot”. And it’s stuck.
Swept into power by a pledge to the electorate to rein in spending, it was well known that the new prime minister was going to initiate a large range of cuts, and that meant stripping the public sector – Canberra’s largest employer – to a shadow of what it was under Labor.
“There is a very serious deterioration in our budgetary situation… I want to stress that we will bring the budget back into surplus,” Abbot told reporters in Canberra during his first press conference after winning office.
Since then, the Coalition leader has been true to his word. September saw the dismantling of agencies for tackling obesity and capital city planning, and the unwinding of so-called “nanny” state agencies such as the Australian National Preventative Health Agency.
The absolute depth at which such cuts will impact on the property market is not yet clear. What is known is that as government agencies, the majority of which are based in Canberra, continue to be scaled down, many Canberra residents will lose their jobs.
Confidence in the ACT economy will take a hit as a result and, faced with an uncertain economic environment, less people will purchase property.
But what will that mean for property prices?
SQM Research property analyst Louis Christopher says the outlook isn’t promising. He forecasts that Canberra property prices will start falling, but says the situation is about a lot more than just job cuts. Still reeling from a construction boom in 2010, the market lacks the kind of dwelling shortage that could steady it through the coming tough economic times.
Christopher’s view is that city’s property prices – including units and detached houses – will drop between 1% and 4%. This is as property prices across Australia as a whole rise by an expected 7% to 11%, buoyed by massive activity in the country’s biggest urban market, Sydney.
“The housing recovery that commenced in the third quarter of 2012 for most capital cities is now about to enter into a more accelerated phase from what has generally been modest price rises to date,” Christopher says. “The results will [vary] from city to city … Canberra will record price falls of between 1–4%.”
In the meantime, Canberra prices have held their ground. RP Data figures show that unit prices are 1% down for the September quarter, while prices of detached houses are up 2.8%.
Looking at the suburb level, prices have fallen by the greatest margin at the more affordable end of the market, with units in suburbs Campbell and Harrison seeing the largest falls after values dived 9% and 10%, respectively.
Among more exclusive markets, price falls have been led by Griffith
houses, which fell 9% over the September quarter.
Suburb To Watch
Peter Blackshaw Real Estate’s Peter Walker explains some of Macquarie’s strengths.
It’s just 7km from Canberra’s CBD and 2km to Westfield Belconnen
Mall and Jamison Shopping Centre, which has a Coles, an Aldi and several small stores. Multiple bus routes service the area, including park-and-ride buses. Recent developments have seen apartments and town houses spring up at the Jamison Inn Tavern site and elsewhere.
Most houses have three to four bedrooms, but those with garages are most in demand. Plenty of properties have renovation potential.
Local industry and businesses
Most residents are commuters to either the city or Belconnen town centre.
The cul-de-sacs off Castlereagh and Erskine Streets are quiet and close to public open space. Streets that serve as the main arteries for traffic include Belconnen Way, which connects Macquarie to the CBD.