It is not easy being a first home buyer these days, but those in Canberra have it harder with a tax hike facing ACT apartment owners. Unit owners will see taxes jump an average of 20 per cent from July next year as part of the ACT government’s five-year tax plan.

According to chief minister Andrew Barr, this could pave the way for “a more even balance in terms of the distribution of the rates burden,” since units and townhouses make up a significant portion of new homes built in the ACT.

However, the tax increase could also spark tightening rents if investors pass on the extra cost to tenants, with first home buyers being the hardest hit.

“Cost certainly plays a part in a lot of investors’ decisions,” said Independent Property Group project marketing director Wayne Harriden. “The unit market, it is where first home buyers buy. At the end of the day, they want to get in the market.”

Still, Derek Whitcombe of Colliers International in Canberra believes that the tax hike would only represent a small increase in dollar terms for most people, such as investors and downsizers.

“I think apartment people have felt fairly blessed in the past in that there’s been a considerable gap between the cost of rates on apartments versus that on free-standing houses and townhouses,” he said. “I don’t think it will have a huge impact on most owners, maybe with the exception of first home buyers.”

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