Much more housing is needed to meet demand and improve affordability, but slugs on developers are holding the sector back, says the Property Council. Photo: Michelle Kroll.
Tax issues continue to cloud the future of the ACT property sector despite a renewed confidence last quarter with a growing pipeline of work and rising hiring expectations.
The latest Property Council of Australia/Procore Industry Sentiment Survey shows improved conditions, but property leaders warn that uncertainty over tax settings in the Territory, particularly lease variation charges, could stall industry momentum.
The survey also showed that the industry had little faith in the ACT Government’s ability to plan for growth.
Property Council ACT & Capital Region Executive Director Ashlee Berry called on the ACT Government to review its tax approach in the June Budget, including lease variation charges, saying this ongoing uncertainty threatened investment and could slow essential housing supply.
“The data shows the property sector is bouncing back, with more jobs and projects on the horizon,” she said.
“But Canberra remains one of the most heavily taxed property markets nationally, and this continues to cast a long shadow over the sector’s ability to build momentum.”
Ms Berry said developers needed clear and predictable tax settings to bring more homes to market.
She said government efforts to streamline planning and encourage medium-density housing were welcome, but without a balanced tax system, developers faced ongoing uncertainty that could slow the housing pipeline.
“Lease variation charges remain a significant barrier to investment, and while recent concessions for build-to-rent are a step forward, their broader application continues to undermine infill housing projects like townhouses and low-rise apartments,” she said.
“If the government is serious about delivering more housing choice, it must consider a more strategic approach to development charges.”
The survey found confidence in the ACT Government’s management of planning and growth remained deep in negative territory, with rising property charges flagged as a key and growing concern for respondents.
Ms Berry said the government’s tax policies were getting in the way of building much-needed new housing to boost supply and improve affordability.
“Housing affordability is a serious issue in Canberra, and taxation plays a huge role in shaping market outcomes,” she said.
“If the tax settings don’t align with housing supply goals, we risk creating further obstacles to development at a critical time when more homes are needed.
“Canberra’s future depends on getting the balance right. We need a tax system that encourages growth and supports housing supply – not one that makes it harder to build.”
The government has a goal of 30,000 new dwellings by 2030.
Treasurer and Planning Minister Chris Steel ruled out any change to the lease variation charges regime when he addressed the industry at a Property Council event last month.
The government announced temporary changes to lease variation charges in 2023 to encourage infill housing. From 27 November 2023 to 30 June 2026, owners can choose whether their lease variation charges to amend the maximum number of dwellings on their RZ1 block is either the codified values or 75 per cent of the value uplift as measured by an accredited valuer, whichever is lower.
But the industry says the lease variation charges regime overall is opaque and hard to navigate, and it wants more certainty in the system.
The survey showed that hiring expectations rose from +16 to +19, slightly above the historical average, and future work pipelines surged from +16 to +39.
Office property values sank into negative territory, from +4 to -3. Zero is considered neutral. However, confidence grew from +116 to +125, where 100 is considered neutral.
