State of Markets - ACT July 2012

Fast figures

• $22 million – anticipated government revenue from land variation charge (ACT Property Council)
• $10 million – current shortfall in land variation charge revenue (Property Council ACT)
• 1% - vacancy rate for Canberra City, April 2012 (SQM Research)

ACT housing oversupply on the horizon

Canberra’s building boom has outstripped population growth, creating an emergent housing oversupply, according to a report from leading economic forecaster BIS Shrapnel.

The report says the ACT’s population has been growing steadily by about 2 per cent annually, well above the national rate of 1.4 per cent, but a squeeze on the local economy was predicted to deter the “interstate migrants” that have been underpinning growth.

“The [ACT] has maintained annual population growth just below 2 per cent for the past five years,” the report said.

“With the government looking to reduce spending so as to return to fiscal surplus, growth in public sector employment is likely to slow, which will weigh on population growth in the [ACT].”

Lease variation charge stifling development

A review of the ACT lease variation charge claims the charge is stifling development in Canberra and adversely affecting housing affordability.

The lease variation charge is imposed when a property is converted into one that is more profitable.

An independent report commissioned by the ACT Property Council found that since the charge was introduced last July, the number of planning applications for multi-dwelling properties has dropped.

Property Council executive director Catherine Carter says the timing of the lease variation charge is poor.

“The government anticipated they would receive $22 million in the land variation charge,” Ms Carter said. “Now they’ve got a shortfall already of around $10 million and this is because developers aren’t developing in redevelopment zones because of this cost.”