There was an announcement in last nights Budget reply speech that should send a shiver down the spine of all highly-indebted ACT home owners:
We’ve announced that we’ll reduce by at least 12,000, through natural attrition, the size of the Commonwealth public sector that’s now 20,000 bureaucrats bigger than in 2007.
When the Coalition was sworn into Government in March 1996, it embarked on a program of public sector cuts, which saw “public administration & safety” employment – a proxy for the bureacracy – fall to 30-year lows relative to the total Canberra population (see next chart).
Canberra housing values also took a battering, falling by -7% over two years on the back of the lower employment and confidence (see below charts).
The problem this time around for the Canberra housing market is that it is also facing booming supply, particularly apartments (see next chart).
The number of homes for sale across the capital is also elevated, according to SQM Research, which may partly reflect the increased level of construction:
Likewise, rental data released recently by Australian Property Monitors showed that Canberra unit rents remained flat over the March quarter, but were down -2.3% over the year (see next chart).
Again, Canberra rental vacancies have risen sharply recently, according to SQM Research, partly reflecting the increased level of apartment construction (see next chart).
Overall, it looks like a bad time to be a home owner in Canberra, with the public sector facing sharp cuts to employment just as increasing supply is coming online.
