Confidence Jumps as Mining States Dust Themselves Off
Confidence across the property sector has lifted to the highest level in four years according to the latest quarterly ANZ/Property Council Survey.
Nationwide confidence surged from 132 to 141 for the December 2017 quarter. A score of 100 is considered neutral.
“Every jurisdiction is experiencing significant lifts in confidence. The mining states of Queensland and Western Australia are dusting themselves off with strong increases in the forward work schedules, and staffing level expectations,” said Ken Morrison, Chief Executive of the Property Council of Australia.
“This is a strong result. While the housing construction cycle is off its peak, the industry is taking confidence from the overall strength of the economy.
“Over the past 12 months, we have witnessed a rise in confidence across the board. Western Australia has led the way with a 24-point lift in confidence.
“We are seeing a lift in expectations for capital growth in the housing, office, industrial, retail, and hotel markets. As well, all jurisdictions are expecting increased state economic growth, and positive growth expectations.
“We are seeing a change in mood and sentiment. The industry’s rating of the economic performance of the Federal Government is trending back to neutral. Only Queensland and South Australia are now reporting significant negative ratings towards the economic performance of their state governments.”
Mr Morrison said expectations are that interest rates will rise and that the availability of debt finance will continue to be constrained.
“The industry understands that with growth comes the expectation of increased interest rates and that the regulators and banks will continue to act judiciously.”
Mr Morrison said the proportion of foreign investment across all property sectors continued to be steady.
Daniel Gradwell, ANZ Chief Economist said the survey provided further evidence that most of the mining-related adjustment is now behind us.
“The most noteworthy result is the ongoing trend improvement across the mining states of Western Australia and Queensland. We have previously noted that the decline in mining-related investment and job losses is largely behind us, and the improvement in sentiment in these regions provides further support to that view.
“Western Australian firms are now expecting economic growth in the state to rise over the next 12 months – the first positive survey in over three years.
“The recently elected Labor Government appears to be playing a role in that improvement, with the Government performance index rising strongly over the past two quarters. 26% of respondents now believe the Western Australian Government is doing a good job planning and managing growth, compared to just 14% in the June survey.”
Mr Gradwell said the construction outlook is strong and will support business investment.
“Expectations of construction activity over the next 12 months rose further in the December survey, with an improving outlook reported across most states and territories and segments of the property sector.
“The construction outlook for the aged care, industrial, and office segments is the strongest since this survey began. As of the December quarter, 81%, 49% and 47% of respondents respectively believe that construction will rise over the next 12 months, compared to 79%, 39% and 36% a year ago.
“This positive outlook is consistent with recent building approvals data, which have been trending higher across these segments as well as tourism. In fact, monthly non-residential building approvals are now sitting at the highest levels on record.”
Mr Gradwell said that sentiment in the housing market generally improved in the December quarter.
“While the outlook is still much softer than during the earlier peak, solid outlooks for construction activity, prices, and labour requirements all suggest that the slowdown in the housing market will continue to be a gradual cooling, rather than a sharp decline.”
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