Canberra's efforts to address housing affordability are setting it up as one of the few cities that may be able to dodge a looming national rental crisis.
The ACT is a rare bright spot in an otherwise bleak picture of rising national rental prices and a tightening in the number of available properties, according to an updated Residential Property Prospects report by BIS Shrapnel.
The report predicts a convergence of factors will see rental prices spike dramatically next year in much of the country as supply dries up and demand remains strong. An average 5.8 per cent annual rent increase is predicted nationally every year until 2012, enriching landlords by a further $1.9billion a year.
Much of the spike is attributed to a drop in the number of properties that will be completed in the coming years, brought on partly by projects being mothballed during the economic downturn and partly by the escalating government compliance costs associated with getting apartment projects started.
BIS Schrapnel senior economist Jason Anderson endorsed the ACT Government's efforts to increase the number of affordable properties in Gungahlin and said unlike most other cities, Canberra's rental prices were only expected to rise about 4 per cent next year.
By more than doubling the number of housing projects underway in recent years, pressure was being taken off the rest of the housing market and keeping rents comfortably in line with wage growth in the territory.
''Even though Canberra has had its problems with land supply, I think [the Government] is doing a great job. If you can increase the amount of affordable housing the sky's the limit in terms of what you can achieve with population growth,'' Mr Anderson said.
Mr Anderson said the growing population in the ACT region would ensure a healthy economy.
The RP Data-Riskmark National Home Value Index found during the first nine months of this year, ACT home values increased 8.1 per cent to $490,946.
While the winding back of first- home buyer grants would have a small slowing effect on the national housing market it was not likely to impact rents as many of those buyers were living with their parents to save a deposit. While the Reserve Bank was facing inflation above its target rate, increasing interest rates could prove a double-edged sword.
''Higher interest rates would dampen the construction of new dwellings, exacerbate the housing shortage and thereby place upward pressure on rentals. This dilemma is set to become much more evident during 2010,'' Mr Anderson said.
He said the two key measures that would help ease the rent burden, particularly on lower income earners, was increasing public housing stock and removing many of the Government fees on development.
Email a friend