The ACT's record-breaking construction boom is set to continue, though it will occur at a slower pace this year, with a new forecast estimating at least $1 billion of building work in Canberra annually for the next three years.
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The forecast, made by the Master Builders Association and based on ABS data, reiterates the ACT's strong economic position on the back of recent economic indicators, including unemployment in the territory at 3.7 per cent and population growth at 2.2 per cent.
It comes despite increased warnings of an imminent national economic downturn, with house prices in most major cities falling quickly. The situation has begun to affect Canberra, with house prices stagnating for the first time in years.
While the MBA report acknowledges those headwinds, it also paints a more optimistic picture of the future of the ACT economy over the next few years, based on data showing $1.6 billion worth of construction happened in the city in 2017-18.
The forecast tips that will continue at $1.6 billion this fiscal year, before easing off to about $1.5 billion each year from 2019-20 to 2021-22.
It predicts the decline in the ACT will not be as strongly felt as it will be in cities like Sydney and Melbourne which have seen inflated property prices for several years, and reiterates strong population growth will be critical to avoiding the worst declines.
MBA ACT chief executive Michael Hopkins said new dwelling approvals fell by 7.8 per cent in the October quarter, suggesting there could be some softening in the market in coming months.
He said engineering construction also fell 7.1 per cent in the year to September 2018, largely due to the tapering off of major works on the first stage of the territory government's light rail project.
MBA chief economist Shane Garrett said the nation was facing its toughest year in almost a decade, amid tightened lending criteria and the fallout from the banking royal commission.
He said new home building rose to record levels in the middle of the decade due to strong population growth, rising house prices, low interest rates and foreign investor demand.
But Mr Garrett said several of the ingredients that helped were no longer in place, citing falling house prices in key markets and new barriers to foreign buyers in some jurisdictions.
The report, however, suggests the growth in rent for most properties was a result of population growth, in particular that caused by working-age residents moving from interstate. It cites the 2.2 per cent population growth rate, which is equal to about 8,760 new residents in the past year.
"The combination of rising house prices and solid rental market conditions in Canberra is in contrast to the
incidence of falling house prices and declining rents in other capitals," it reads.
"This makes the ACT one of the more attractive markets for housing investors at the moment, although the slower credit conditions resulting from the ongoing royal commission have dampened this a little."
