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Overflow may push land prices up: report

Canberra land prices are expected to rise as suburbs take over grazing land and hobby farms.

Canberra land prices are expected to rise as suburbs take over grazing land and hobby farms. Photo: Graham Tidy

Canberra land prices are expected to rise as suburbs take over grazing land and hobby farms, according to a national economic study.

However the annual State of the Regions report released on Sunday by the Australian Local Government Association says the national capital remains a city of high incomes and relative ease of access to workplaces.

More than 1000 local government representatives are in Canberra for Monday's launch of the referendum campaign to include local government in the constitution.

The report, prepared by National Economics, warns some communities around the nation will become uninsurable against natural disasters because the cost of insurance is soaring due to the increasing incidence of floods, fires and cyclones.

Co-author Ian Manning said Canberra's suburbs were now coming close to the ACT's boundaries.

"By and large Canberra has a pretty good history of maintaining the supply of reasonably priced lots with reasonably good accessibility to the jobs in the region,'' he said.

"However as soon as you start to overflow, you no longer have the land which is just under government ownership and leased out to farmers, like you used to have in Gungahlin until quite recently.

"As soon as that's gone, Canberra is in the same position as the other capital cities whereby it's expanding into land that's already held at hobby farm prices, and that causes a jump in the price of new lots.

"There's still plenty of land with reasonable accessibility to jobs in Canberra but it is available only at hobby farm prices.

''Of course current residential leaseholders in Canberra will benefit from that because they'll get capital gains. It won't be too good for the economy of the place as a whole … one of Canberra's big advantages has been the supply of reasonably priced housing with good job accessibility.

''It's actually also been an important advantage for the Commonwealth Public Service in recruitment.''

The report says the history of the ACT shows the most efficient and equitable way to develop a city on a greenfield site is to take the concerned land into public ownership well in advance of the threat of urban development and manage its conversion to urban use.

''Nationalised land in the ACT was leased for farming until required for urban development, at which time road reserves, school grounds, hospital sites, parks, reserves and the like were retained in public ownership while the rest was leased out for residential, commercial or industrial development,'' it says.

''Canberra has its critics and certainly reflects the fashions of the eras in which it was built but it has also set the gold standard in Australian suburban development.''

The report says the NSW southern inland ''which in large part comprises outer suburbs and the hobby farm belt for Canberra'' experienced population growth just short of the national average rate.

''It seemed that Canberra was overflowing, with the southern inland becoming its outer suburbs, or at least its hobby farm belt,'' it says.

Since the global financial crisis - 2009 to 2013 - household disposable income in the ACT grew by 2.2 per cent a year.

The north-west of Western Australia had the highest household wages of $215,000, followed by the ACT with $126,000.

6 comments

  • I stopped reading the article when "reasonably priced" as bandied around. There is nothing “reasonably priced” about Canberra’s real estate. $250k for a postage stamp sized block is not reasonable.

    Commenter
    Wing Nut
    Date and time
    June 17, 2013, 8:59AM
    • I sure hope prices are on the way up! I have a number of investment properties in Canberra, and increased prices mean decreased affordability for families and that means increased demand for rentals!

      Can't understand why more people don't invest in Canberra, wages are high, but there are always struggling families who need to rent - and they make great long-term stable tenants as they usually can't afford to move out. That also means regular rent increases every 12 months.

      Commenter
      Good to be King
      Location
      Ivory tower
      Date and time
      June 17, 2013, 9:59AM
      • That´s kind of a feudalist view of things... IMO, a small law giving first home owners priority purchase over investors in the first home owner bracket (let´s say up to 450K) would make a huge difference. That´s certainly kind of a communist view of things, but Canberra would be a much happier place if families actually had a decent chance to get into the market by their own means and get a bit of value for their money.
        By the way, there have been times in history, when it suddenly became less Good to be King... A bit of care and consideration for the people living below may not bring the same immediate and financial reward, but may actually pay off in the long run...

        Commenter
        ThinkTwice
        Date and time
        June 17, 2013, 11:42AM
        • The last roll of the dice to get the sheeple back into overpriced and over hyped property, good luck! Most people would have woken up by now, so even the $5k bribe from the ACT gov won't do much, as $300-$500k for a block of land in Canberra is beyond all realms of normality.

          Commenter
          TheJoker1214324
          Date and time
          June 17, 2013, 12:06PM
          • suuuuuure... and how do we reconcile this article with an article a few days ago that said they were reducing land release quotas because of a lack of demand? land not selling, rental vacancies climbing and prices dropping. good to be king, you should change your name to be "good to be king... for a day" (or in the case of canberra, a decade)

            Commenter
            joe
            Date and time
            June 17, 2013, 12:23PM
            • The peak for rental property is over - the days of lining up with twenty othes to secure a rental home where you had to beg and borrow to fund outrageous prices are over. From a combination of reasons including seriously over-inflated prices, housing prices will come down. Likewise, the current saturation of rental properties will continue to force owners to reduce rental prices, ease their conditions or simply miss out. Good to be King's logic is bad economics - why invest in an over priced market - the cost of maintenance, interest and property rates and the fact your rental property will devalue substantially through market forces and neglect, is not good business. Also factor in stress caused by tenants who turn out be seriously bad.

              Commenter
              Banjo
              Date and time
              June 17, 2013, 1:22PM
              Comments are now closed
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