An emerging value gap between house prices in Canberra and the other capital cities could kickstart a fresh building boom in the ACT within the next 12 to 18 months CommSec chief economist, Craig James, said.
"Housing construction moves in cycles," he said. "While housing starts in Canberra are low [at the moment] outsider investor interest could drive the start of a new [building] cycle in Canberra in the next 12 to 18 months."
Mr James, who was commenting on Monday's CommSec State of the States report said the Australian economy was in good shape, low petrol prices and the low dollar were providing economic stimulus, and there was no need for the Reserve Bank to cut interest rates in February.
According to the report the ACT was the only jurisdiction where property prices fell between December 2013 and December 2014.
While, at 0.6 per cent, the fall was negligible, NSW prices, which are dominated by movements in the Sydney market, soared 12.4 per cent. Victorian prices rose 7.6 per cent and Queensland prices rose by 4.8 per cent.
The national average, which was skewed by the NSW property price result, came in at 7.9 per cent.
Mr James said investors were already concerned about returns on new developments in Sydney and Melbourne. If Canberra's property prices remained stable and the value gap widened, investment in the ACT would look quite attractive.
"Given the [relatively low] prices it wouldn't surprise me to see outsider investment activity," he said. "[Sydney] investors are already looking for returns in other states and territories."
State of the States logged mixed messages for an ACT economy grappling with both pre-election and post-election public service cuts, a slowdown in hiring and consumer spending and an overall lack of confidence.
During 2014 Canberrans generally paid more for goods and services but less for their homes as unemployment rose and the size of wage increases fell.
Although the ACT's December 4.9 per cent "trend" unemployment rate was the second lowest in the nation it was 41 per cent above the 10-year average unemployment rate of 3.5 per cent. "[This is] the worst performance in the nation," the report states.
The Northern Territory's 3.6 per cent "trend" unemployment was 14 per cent below the 10 year average of 4.2 per cent and Tasmania's 6.8 per cent unemployment was 13 per cent up on the decade average of 6 per cent but well down on the 8.2 per cent recorded in August, 2013.
Mr James said job shedding and hiring pauses by both the Federal and ACT Governments would have been factors in the ACT's employment outcome and believes the same factors would be responsible for Canberra having the lowest wage growth in the nation over the past year at just 1.7 per cent.
Given consumer prices in the ACT have only risen 2 per cent and property prices have fallen, Canberrans are still better off than, say, a NSW resident whose wage has gone up (on average) 2.6 per cent against consumer price increases of 2.2 per cent and property price increases of 12.4 per cent.
While Canberrans are taking advantage of the flat property market to snap up existing homes faster than anywhere else in the nation, the demand is not yet generating new construction.
Mr James said while the ACT led the take-up rate for housing finance with a 9.8 per cent increase on the 10-year average, construction work remained relatively stagnant at just 6.5 per cent above the average.
While refinancing by homeowners moving to lock in historically low interest rates would have driven some of the ACT's housing finance blip, it would have had a similar effect in other places as well, he said.
Mr James said the Australian economy was still "in very good shape" when compared to other parts of the globe and had not slipped back since the end of the Global Financial Crisis.
"You are talking about an economy that hasn't contracted in 23 years," he said. "At the moment we are transitioning from an economy that is driven by the mining sector to one that is driven by the housing sector.
"There are people who would like growth to be occurring faster than it is. But it [the economy] is still growing and we do know that the outlook for housing construction in Australia is good."