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Budget cuts spell bad news for Canberra property

Budget cuts spell bad news for Canberra property

by Stefanie Garber and Steven Cross 0 comments

The Canberra market may be threatened by public service job losses, a number of property experts have warned.

Treasurer Joe Hockey told parliament that over 16,500 public sector staff would be made redundant in the next three years.

“A smaller, less interfering government won't need as many public servants,” he said.

Senior economist at Australian Property Monitors (APM) Dr Andrew Wilson said the announcement is bad news for Canberra.

“There will be ongoing job shedding in Canberra which is going to impact an already weak market.

The Canberra market, which was the only property market to lose ground in the first quarter of 2014, is no stranger to job cuts however.

“Canberra has been reeling from these job cuts over the last three budgets, and this is another addition to that. It’s no surprise that the Canberra housing market is the underperformer at the moment,” Dr Wilson said.

Buyers agent and director at wHeregroup Todd Hunter predicted these cutbacks could stifle growth in Canberra property values.

“I wouldn't like to be a property owner in Canberra right now,” he said.

“I think you're going to see a huge correction in prices and rental yields.”

According to the Australian Bureau of Statistics, over 21.2 per cent of Canberrans work in central government administration, compared to 1.3 per cent of people Australia-wide.

Typically, the Canberra market tends to have quite high rental yields due to the large proportion of high-income earners living in the capital, Mr Hunter said.

However, large-scale job cuts could cause the rental market to weaken.

“Because of that correction in rent, you'll also see a correction in house prices,” Mr Hunter said.

“It'll be a ‘watch this space’ scenario but it's not good news, that's for sure.”

Budget cuts spell bad news for Canberra property
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