High wages, employment and population growth have served the ACT's property market well in recent times, but budget initiatives could lead a slowdown in capital growth.
After a couple of months of stagnation, the ACT property market has improved its monthly capital growth rate according to Residex figures, but there appear to be some storm clouds on the horizon as a result of measures announced as part of the Rudd government's first annual budget.
February and March saw minimal or negative monthly growth in ACT for both houses and units according to Residex data, with capital growth rates approaching -1% for both houses and units during March, so April's growth figures of 1.83% for houses and 1.7% for units indicate a significantly improved performance in the territory.
Couple this with double-digit capital growth rates for both houses and units over the last 12 months and the last 10 years, and April's results could be seen as a welcome return to form for ACT's property market following recent interest rate hikes.
However, several experts are predicting that cost-cutting measures announced in this year's budget could have an effect on ACT's population growth rate, and consequently its housing market.
"Slower economic growth and the prospect of cutbacks in Federal Government departments are limiting what has been a relatively rapid rise in population and may see an easing of housing market pressures in the second half of 2008," says ANZ's April Housing Snapshot.
Commenting on the Federal Budget, Rory Mcleod, National Director of Research at Colliers International, points out the potential effects of budget initiatives on ACT's rental market. Citing government plans to transfer or make redundant between 5,000 and 6,000 public servants in the territory, Mcleod warns that "those of you with investment properties in Canberra may see higher vacancy rates".
Andrew Donnelly, CEO of property advisor Braxton Chase, however believes that rental properties in ACT will continue to be a sound investment as the year progresses.
"The yields for both units and housing in Canberra are second only to Darwin, and these can be expected to increase even further in the year ahead due to the ever-tightening rental market," says Donnelly.