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Canberra brokers fear the local housing market may be “decimated” if the federal government implements proposed Budget cuts.
The National Commission of Audit has recommended tens of billions of dollars worth of savings in response to an “ominous” fiscal outlook and “unsustainable increase” in spending.
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One of the commission’s recommendations is to slash the number of government employees. Tungsten Home Loans director Brad Quilty said that would hurt the Canberra economy, with the national capital home to tens of thousands of public servants.
“If you’re going to cut hundreds or thousands of jobs, there is going to be a massive drop of people who can live in Canberra and afford to be here and the housing market will be absolutely decimated,” he said.
Mr Quilty told The Adviser that this wouldn’t necessarily lead to fewer loans being written, but that the value of loans would drop in line with a fall in house prices.
Dominion Finance director Suzanne O’Connor said the Canberra economy had already slowed since Tony Abbott’s election in September 2013 due to concern about potential Budget cuts.
She said people would become even more worried if the government followed through on the Commission of Audit findings.
“It will definitely affect the housing market. There’s no doubt in my mind at all. At least half the people we see would be public servants,” she said.
“When things are great, the property market and businesses like ours do really well.
“But public servants also get nervous. Even ones you imagine wouldn’t have an issue with their jobs are starting to get nervous and hold back on things they don’t need to do straight away.”
Pass Go Home Loans owner Jamie Moore said his business would be reasonably sheltered from any Canberra downturn because of his stable of interstate investment clients.
However, he told The Adviser that reducing the size of the public service may not impact house prices and the general economy as much as some people feared.
Mr Moore said most public servants who get ‘sacked’ actually accept voluntary redundancies in expectation of finding work elsewhere.
The economy could even see a net benefit if people transferred from public roles in which they were not needed to private companies in which they were needed, he added.
