Canberra property market likely to slow down, especially under Coalition: John McGrath

The Canberra and Darwin property markets will experience a slow-down, especially if the Coalition wins the federal election, according to leading Sydney estate agent John McGrath.

Areas heavily reliant on the public sector employment experienced strong growth during the global financial crisis but the growth will slow down, McGrath told the audience at the Property Millionaires Tour in Melbourne on Friday which Property Observer attended.

“Canberra and Darwin have been stellar performers in the last few years. My personal view is they won’t have that same stellar performance again going forward because they’re kind of like a defensive stock in the stock market.,” McGrath said.

“When things are bad people like defensive stocks because they are safe and never really change much but when the cycle starts to go back up and the economy starts getting back into a roll then often places like that are left behind. Plus they’ve enjoyed some good growth.”

He says Canberra has challenging times ahead if the coalition wins government.

“They’re talking about cutbacks and some of the roles there may not be replaced in terms of public service,” he said.

“I still think it’s going to grow but I don’t think it will grow a heap.”

He cautioned potential buyers they may be too late to cash in on Darwin price rises.

“Over the last 10 years Darwin has been going up at about 10% a year. Some would say that sounds great but sometimes when you can see the bandwagon already formed it’s too late to get on,” McGrath said.

“It would have been a great market to get into a decade ago if you had the insight to see it was going to perform like this.”

McGrath’s comments echo the thoughts of Hotspotting’s Terry Ryder who says there will be earth-quaking changes in Canberra post-election.

“It’s pretty clear whoever wins will put the cleaners through the federal public service, particularly if we have a Tony Abbott-led government on Monday morning,” Ryder said.

He says there will be significant job losses which would replicate the actions of Liberal state governments as they have taken over in Victoria, New South Wales and, especially, in Queensland.

“Canberra, therefore, is a market to avoid. Prices are likely to fall.”