Rudd caught up in Canberra’s housing slump

By Leith van Onselen

Back in May, I asked whether it was time to sell Canberra housing, based on the Coalition’s pledge to axe 12,000 public servants from the Federal bureaucracy, as well as the potential oversupply of homes stemming from the recent surge in apartment construction.

Now it appears that our own Prime Minister, Kevin Rudd, has been caught up in the slowdown, with his $2.25 million Canberra home failing to sell and now being pulled from the market. From Bloomberg:

Rudd and his wife, Therese Rein, who listed the property for sale on May 29, withdrew it this week, agent Shane Killalea of Peter Blackshaw Canberra, who was marketing the home, said yesterday. Home sellers in the Australian capital sought an average of 4.8 percent less in the week ended July 16 compared with a year earlier [see below table].

In a city where a third of workers are government employees, Canberra house prices could fall sharply if the Liberal-National coalition wins the election and makes good its promise to cut the number of government workers — just as it did when it last won in 1996.

“A sizable correction of over 10 percent is possible over the next two years,” Louis Christopher, managing director of Sydney-based SQM, said in a telephone interview.

John Howard, who became prime minister in 1996 when the coalition won government, cut 10,000 jobs in each of the following three years… Home prices in Canberra fell 8.3 percent from March 1996, to a low in August 1997, while prices jumped 18 percent in Sydney and 13 percent in Melbourne over the same period, figures from Sydney-based researcher Rismark International show….

With Rudd’s family said to be holding a $10 million property portfolio, the cynic in me wonders whether a Rudd-led Government would be more likely to embark on another short-sighted housing-led stimulus in a bid to support home values, as occurred under his watch in the wake of the GFC.

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