Threat to Canberra workforce
There’s no denying that a federal election can impact confidence in the property market, and in the nation’s capital the consequences of September’s vote could prove to be dire
When John Howard was elected back in 1996, he swiftly forced Canberra into a recession with massive job cuts throughout the public service. At the time, he pledged that only 2,500 jobs would go; the final figure was much higher, with some placing it closer to the 20,000 mark.
While Tony Abbott has promised that if he wins in September he has no plans to execute a similar “bloodbath of the public service”, shadow treasurer Joe Hockey isn’t so reassuring.
“We’ve said the public service here in Canberra has to be reduced by 12,000 over the first two years as a starting point,” Hockey reveals.
This accounts for around 18% of Canberra’s public service workforce, and if this scenario plays out it will strip around 6% from the total number of jobs in the ACT capital overall.
It’s no wonder property buyers – both investors and owner-occupiers – are sitting on their hands for the time being.
“There’s no question that the market is not booming,” confirms Real Estate Institute of the ACT spokesman Craig Bright. “The closer you get to an election, the market tends to drop away… And it certainly doesn’t help when they call a nine-month election [lead-up].”
While Bright believes that Canberra’s soft property market will bounce back after September’s federal election, investors are clearly not as confident.
The most recent Property Industry Confidence Survey (a survey conducted by the Property Council of Australia and ANZ each quarter) recorded local industry sentiment at 96 on the index, with a score of 100 considered neutral. It was the lowest score of any state or territory in the country, except for Tasmania, placing it alongside Tassie as one of the least positive property markets in Australia.
“The combination of an uncertain political outlook and a continued unwinding of the 2011 dwelling construction boom is likely to have weighed on ACT property industry confidence,” says Paul Braddick, ANZ head of property research, adding that ACT economic growth is expected to be “lower in the next 12 months”.
Suburb to Watch
Cook
Northwest of Canberra’s CBD lies the family-friendly suburb of Cook, where buyers can secure high-quality homes without paying high-end prices.
Realtor and auctioneer John Whiting of Blandfordia Real Estate recently sold a three-bedroom home on an 830m2 block of land for $521,000, which he says was a steal compared to similar properties in neighbouring suburbs.
“You’re getting real value for money, because if you took that house and put it in almost any of the surrounding suburbs, the price would start with a six instead of a five,” he says.
Whiting describes Cook as an “ultra convenient”, leafy suburb, with great facilities and close proximity to shopping centres and the city.
“It represents a real pocket of value, with the same attributes as many of its more expensive counterparts,” he explains.
“It features leafy, big blocks, and the general feeling is that it’s been largely overlooked by buyers. Typically, houses make up most of the market. Generally, they’re original threebedroom houses without en suites, but the area is starting to see knockdowns and rebuilds of larger homes, because the blocks are often 800 squares plus.”
