Bickering, bribery and late night coup d’etats. Welcome to Canberra!
Politics. Whoever thought that a group of lawyers (generalisation, I know, but it’s not far from reality) with varying ideals could use reasoning to reach a mutually beneficial outcome needs to have their head examined. I’ve often thought that a political landscape where economists or engineers (or property analysts) were the decision makers would be far more advantageous. But that’s just me.
I could talk politics all day but this series is titled ‘Where are the Markets?’, so to property we go.
The latest CoreLogic RP Data Hedonic Home value index showed that Canberra was the weakest performing capital city during the three months ending December 2014. While every capital city rose, Canberra and Darwin were the only ones that saw a drop in property values during the same period. Canberra is also the only capital city that recorded negative growth during the twelve months ending December.
It doesn’t fare much better from an employment perspective; the tough talking Hockey has nowhere to run but to cut costs, and that means cutting jobs – not good news for Canberra. Public sector numbers in the capital are set to fall, with 6,000-7,000 jobs poised to go over the next two years. The ambiguity surrounding public sector job cuts and their impact on Canberra’s economy and job market has affected demand, and is likely to continue doing so. Once demand has decreased, the property market starts to experience widespread oversupply issues.
The market is already struggling with an oversupply of apartments and declining demand has contributed to rising vacancy rates (3.7 per cent Jan 2015 – SQM research). The likely result for the Canberra property market is near term (24 months) price stagnation, relief of which will come with more positive job market sentiment.
As depressing as all this sounds, there are a few positives (heavy emphasis on ‘a few’!). The ACT has some of the highest wages in the country, so affordability remains strong. The territory is also the third fastest-growing economy in the country, racking up growth of 2.5 per cent during the past twelve months.
Overall, Canberra rates poorly when assessed using the Blue Wealth research model, particularly from the perspective of economics and employment, and is likely to remain in correction for the foreseeable future. Canberra property approval rating? Declining.
*Number of leadership spills while you read this article? Seven.