Effects on Canberra housing market

[namtrak]

As you may be aware, I am conducting my own due diligence in regards ot a move to Canberra and purchase of PPOR. We will keep one IP and possibly gain 1 or 2 others in the near future.

As it stands at the moment, our decision (which may change hourly) will be to rent for upto 15 months (until an offer to have stamp duty paid expires) and try and buy when the market in Canberra settles down a bit.

The standout economic factors, as far as I can tell in Canberra, are the extraordinarily high disposable income and the highly controlled release of new land.

And given that Interest Rates have risen and should continue to do so and that Rudd has signalled some cutbacks in the Federal Public Service (assuming he wins gov't) and that the sub-prime stuff isn't over yet, and may be just about to hit Australia.

What are the experts opinion on the short/medium term Canberra housing market?

My assumption would be that it will start to cool off, and in some of the outer suburbs actually see price drops. I can't see much change on the inner suburbs regardless of what happens - maybe a few renovators/speculators will get caught but thats about it.

Thoughts?

 

[Ausprop]

it's all geussing but when do govts honestly cut back? with so much cash sloshing around Canberra is just one of the many boom time recipients of our new found wealth

 

[marg4000]

I have lost count of how many new committees, review departments etc. Rudd has promised to set up if he wins the election - departments to oversee the cost of food, petrol, interest rates etc, according to one newspaper approx 165 new entities. So it is very hard to see how the number of public servants can be cut.

My prediction would be for the numbers to rise.
Marg

 

[namtrak]

Yes, I guess the traditional dogma is that a 'leftist' (very loosely) government would actually increase the size of the government, given their underlying belief systems. However tradition would have us also believe that interest rates would also rise under a labour government, when the reality is that the last major interest rates rise was under the Fraser Government, and it was (to a small degree) the dry economic policies of Keating the Treasurer and Keating the Prime Minister which saw interest rates stabilise. I assume the biggest influence on local interest rates is probably world economics more so, than anything local.

Either way, I suspect that Rudd will probably lead a very dry government, and may tend to implement his proposed cuts. In a similar vein to the early Howard years and Kennets time in Victoria. Privatise at all costs was the economists mantra, no?.

I just can't get my head around the why of Canberra's situation. It has no foreign investment, no resources boom, no coast, marginal population - no real economies of scale. Does disposable income really play that big a role in market forces?

 

[WillG]

Yes, I guess the traditional dogma is that a 'leftist' (very loosely) government would actually increase the size of the government, given their underlying belief systems. However tradition would have us also believe that interest rates would also rise under a labour government, when the reality is that the last major interest rates rise was under the Fraser Government, and it was (to a small degree) the dry economic policies of Keating the Treasurer and Keating the Prime Minister which saw interest rates stabilise. I assume the biggest influence on local interest rates is probably world economics more so, than anything local.

Either way, I suspect that Rudd will probably lead a very dry government, and may tend to implement his proposed cuts. In a similar vein to the early Howard years and Kennets time in Victoria. Privatise at all costs was the economists mantra, no?.

I just can't get my head around the why of Canberra's situation. It has no foreign investment, no resources boom, no coast, marginal population - no real economies of scale. Does disposable income really play that big a role in market forces?

Canberra may not be the metropolis that Albury is but it does house the large proportion of Federal Government departments requiring specialist technical, business, legal and security skills. These skills generally command high $$'s to attract the best people. Supporting the government departments are a plethora of small to medium business's contracting either directly or indirectly to the departments.

The higher disposible incomes are pumped into housing, schools, universities (ANU is one of the largest in the country and has one of the largest research arms)

 

[geoffw]

Canberra has seen quite a number of Public Service cutbacks, of varying degrees. Some have hit the local economy very severely. But more recent cutbacks have not had the same effect. This may be to do with the severity- but it may also be to do with the strength of the local economy.

My view is that Canberra now is much less dependant on the public service than it was. Many people who left the PS in the more recent cutbacks (ealy to mid 90s) used their payouts to start their own businesses.

I understand that the private IT industry is quite strong in Canberra.

Many of the cutbacks are illusory. People take their payouts on a Friday and come back on Monday as a private consultant. The government can legitimately claim that they have cut down th number of public servants.

In many areas of the PS there has been scaling back. But in areas of security and defence there have been huge rises. The AFP was refurbishing a build for use as HQ- before it's even completed, it's nowhere near big enough.

 

[geoffw]

(ANU is one of the largest in the country and has one of the largest research arms)

And was again rated as Australia's best (Number 16 in the world).

 

[Francesco]

Cut backs in Canberra will be offset by funding to implement budget promises and commitments. Ministers with big egos will have big departments and brigades of highly paid consultants hanging on.