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.