Tony Abbott’s stated policy of cutting 12,000 public servants is being reviewed. For the ACT, it’s not just jobs riding on the outcome, but the property market as well
Public servants and property investors in Canberra have been biting their nails in recent months. Would they be one of the thousands of public servants laid off through the Abbott Government’s cost cutting measures? Would property prices plummet accordingly?
In its first few months in government, the Coalition hasn’t done anything too drastic to the public service. In fact, Abbott has discovered that the previous Labor government also had plans for thousands of job cuts and he now wants to review the manner and timing of the Coalition’s strategy to cut 12,000 public service jobs over the next four years.
But if it’s revealed the budget has deteriorated further in the coming months, then even more job cuts could be on the cards, says Shane Oliver, AMP Capital’s Chief Economist.
“ACT is a vulnerable market at the moment,” says Oliver. “It is dependent on how hard the new federal government goes in laying off public service workers.”
Despite the uncertainty, the latest Property Council/ANZ Property Industry Confidence Survey actually shows a slight increase in sentiment from 94 in the September 2013 quarter to 99 for the December quarter. Much of that improvement is speculated to have been a result of the Federal Elections getting done and dusted.
Paul Braddick, ANZ Head of Property Research, says that even with the small improvement, the result shows respondents are not overly confident with the economic outlook for the ACT.
“This result reflects the offsetting impact of a likely fiscal consolidation, following the change in government, weakening the outlook for office employment and office property in particular, and the recent surge in dwelling construction plans.”
It’s not all bad
Despite the ominous outlook, NextHotSpot.com.au director Andrew Peterson sees a potential light at the end of the tunnel for investors. He says that John Howard made similar cuts to the public service in his early years as Prime Minister, and consequently, some parts of Canberra took a 20-25% hit in the short term.
“Now if you look at Canberra in a general long term trend, it has been one of the best regional centres for capital growth,” says Peterson. “So when these sackings come, maybe we should keep an eye out for cheap property in Canberra because it’s got a history of recovering.”
“The joke is that there aren’t many recessions in bureaucracy.”
Suburb to watch: Gungahlin
Just 10km north of central Canberra, Gungahlin is easily one of Canberra’s most underrated suburbs. The population has exploded in recent years from 3,857 in 2006 to 5,617 in 2011 – an increase of 45.6% and it is expected to keep growing in coming years. Gungahlin also has a young population with a median age of 29, according to the latest census, which is eight years below the national average.
The suburb is amenity-rich and includes the Gungahlin Medical Centre, Gungahlin Marketplace and the Gungahlin College. 2012 saw the announcement of $6.5m in investment for new grandstands at the Gungahlin Enclosed Ovalew, in addition to the previously announced $6m for the enclosed oval. Both are scheduled to be completed by the end of the year.
A bus interchange is located on Hibberson Street. There is also talk of a light rail link from Civic to Gungahlin.
The current median house price is an affordable $526,500 and rental yields are a healthy 5%. There is also solid demand for, due to the vacancy rate of just 1.23% and the fact that there’s only 0.84% of stock on the market.
