Canberra home owners are bracing for a hit to housing prices after job cuts totalling 16,000 and plans to cut or merge another 50 government agencies are expected to be announced in Tuesday's federal budget.
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ANZ senior economist Cherelle Murphy said “if we are to see these job cuts it would be hard to envisage the ACT market is not affected in a negative way''.
“Stable house prices is the best scenario for the ACT.”
The past year has not been a cheery one for investors. According to RP Data house rents have fallen 3.6 per cent in the past year with unit rents down 5.7 per cent in the capital. Ms Murphy said units had been in oversupply for a while now.
RP Data senior research analyst Cameron Kusher said investor activity would fall further. “We will probably see a further decline in rental demand and subsequently rents over the coming year,” Mr Kusher said.
“There will likely be a flow-on effect to other jobs and retailers. We would expect sales activity to fall and values to also fall as a flow-on effect of the job losses.”
With 50 per cent of his customers public servants, Gungahlin real estate agent Michael Braddon from Peter Blackshaw said he was seeing no urgency from buyers at the moment.
“There are not many investors in the market at the moment. I think the cuts will definitely have an impact,'' he said.
“There is an oversupply of units on Flemington road, for example. And if the low end of the market is affected, it will have a flow-on effect to the more expensive end.”
Business confidence is also likely to be affected. Eric Koundouris, the managing director of Koundouris Group, which owns Supabarn Supermarkets, said: “There is no doubt that the cuts will affect the local ACT economy in the short term.”
Digress Cocktail Bar owner Sarah Singh said her business was already feeling the impact. “People are holding onto their wallets and less people are eating out. Our restaurant has slowed significantly in the last three months.
“Most of our customers are from Customs and we used to have a lot of AusAID customers but they have now moved.”
But it is not all bad news. ANZ’s Ms Murphy said “at the moment the unemployment rate is 3.6 per cent in trend terms, which is quite low. This will help adjust to the cuts.”
Real Estate agent Richard Luton remains upbeat. “I haven’t got a crystal ball, but in the short term we will be affected for a month or so, then I think it will be business as usual.
“We sold a place for $2.75 million in Kingston two weeks ago. Let’s wait till tomorrow.”
