ACT government scrambles to sell off public land in prime locations
Advertisement

ACT government scrambles to sell off public land in prime locations

The ACT government is racing to sell off 10 significant properties within six months to avoid missing out on bonus payments from the Commonwealth.

The rush to dispose of old public housing blocks coincides with a lull in the apartment market, raising the prospect of the government losing millions of dollars by selling the sites cheaply.

One of the prime Northbourne Avenue sites for sale is where Macarthur House stood, until its demolition last year.

One of the prime Northbourne Avenue sites for sale is where Macarthur House stood, until its demolition last year.Credit:Karleen Minney

However, property industry leaders say Canberra's sluggish unit prices will not impede the sales, and predict the government will find buyers easily, citing rapid population growth and extremely low vacancy rates.

A spokeswoman for the ACT's economic development directorate said the government was confident it would complete the sales and qualify for the remaining $15 million in federal "incentive payments".

Advertisement

The Abbott government set up a $5 billion "asset-recycling" fund to encourage states and territories to privatise government businesses and renew infrastructure. The Commonwealth agreed to top up the sale proceeds with an extra 15 per cent if the state or territory spent the money on public infrastructure.

The ACT received about $52 million in bonus payments from selling betting agency ACTTAB as well as 10 offices and public-housing complexes. It spent the money on the light-rail route.

But to access the rest of the funds, it must sell a further 10 sites, and settle the transactions, before June 30, when the asset-recycling scheme ends.

The properties the government is trying to dispose of include prime locations such as the Northbourne Flats in Turner and Braddon, the ACT Health offices on Moore Street in Civic, and the O'Connor site where the recently demolished Macarthur House once stood.

However, economic modeller Ben Phillips, an associate professor at the Australian National University, said there were signs of an oversupply of accommodation in Canberra.

Bureau of Statistics data showed ACT rents "have been pretty flat for four or five years", he said.

Data from Domain also shows Canberra's median unit price fell 1.7 per cent last year, the worst outcome in 15 years.

"If anything, we probably have a bit of a supply overhang at the moment," Professor Phillips said.

But this did not necessarily mean the government should delay the development of new dwellings.

"Predicting what a market will do is tough. My gut feeling is it would have been better for the government to sell 12 months ago, but no one really knows.

"One thing's clear: Canberra is not Sydney or Melbourne, and prices here won't move the same way they did there."

However, the Independent Property Group's head of project planning, David Shearer, said the claim the ACT had a housing oversupply was "utter rubbish".

SQM Research's latest estimated residential vacancy rate for Canberra was 0.9 per cent. Mr Shearer said a rate that low was "dangerously unhealthy and a sign of policy failure".

Loading

"The perception that the unit market here is oversupplied is crazy," he said.

"The rental vacancy rates show that. People are desperate for accommodation and it's getting worse.

"The problem is one of perception. People are reading about what's happening in Sydney and Melbourne and projecting it on to Canberra, even though it's not happening here."

Mr Shearer said the ACT government would have no trouble completing the sales of the 10 sites because it was the city's monopoly supplier of land.

The government could effectively block other developments by stymieing lease-variation applications, he said.

"If they need buyers for their 10 big sites, all they need to do is slow down the market elsewhere. Given they have complete control, that shouldn't be difficult."

Mr Shearer said Canberra was ripe for investment, as rental yields were consistently the country's strongest. "This city has the highest-paying, most-rewarding tenants, with almost no risk for landlords."

Asked why investors had been reluctant to buy in recent years, he said they were wary of the ACT government's high land taxes.

"That's noticed. It has an effect. The government says it's doing this so it can reduce stamp duties but the budget papers show this hasn't been revenue-neutral."

Loading

The Property Council's ACT executive director, Adina Cirson, also believed there was sufficient demand to sell all sites.

She said Canberra's fast-growing population made it crucial to "keep the pipeline of new projects coming fast".

"When we have light rail, we're going to have a lot of demand along that corridor, where some of these sites are.

"It's the same with the ageing population – we need to give people opportunities to downsize to the right-sized housing."

Disclosure: Nine, the owner of The Canberra Times, also owns Domain.com.au.

Markus Mannheim edits The Public Sector Informant and writes regularly about government.

Most Viewed in National

Loading
Advertisement