Property industry confidence remains robust – housing affordability concerns increase

Property industry confidence levels remained close to recent record highs as the sector continues to lead Australia’s economic recovery from the COVID-19 pandemic in new data gathered prior to the current outbreaks.

The results of the latest quarterly ANZ / Property Council Survey showed confidence within the property industry - which employs 1.4 million Australians - would be critical to the rebound from the current COVID-19 outbreaks.

The survey found that national industry confidence was at 139 points, the third highest level since the survey began. A score of 100 is considered neutral. The survey found that Housing Supply and Affordability topped the critical issues lists for both Federal and State governments for the second quarter running.

Property Council Group Executive of Policy & Advocacy, Mike Zorbas, the property sector was doing the heavy lifting to drive Australia’s economic recovery.

“As Australia emerges from the current lockdowns, the property sector will again be essential to our economic prospects,” Mr Zorbas said.

“Policymakers need to be looking at new ways to stimulate housing supply, our capacity to supply apartments in coming years and to support new job-creating opportunities.”

“The survey results have found that housing supply and affordability have solidified as the key area that industry participants want the Federal and State governments to focus on for recovery.”

The Productivity Commission’s seminal Shifting the Dial report found that creating better functioning cities and towns was one of the big five productivity opportunities for the nation.

Mr Zorbas said confidence remained robust because national growth and jobs forecasts in the May 2021 Federal Budget were so much more positive than expectations in previous quarters but sounded a note of caution on housing affordability.

“Poor supply is the enemy of housing affordability. We need to be investing in the right infrastructure, fixing housing affordability, reforming archaic planning systems, phasing out stamp duty, getting zoning right and investing in social housing,” Mr Zorbas said.

“As a country we need to find more effective ways to make planning systems efficient and we encourage National Cabinet to consider National Competition Policy style incentives to help make it happen.”

ANZ Senior Economist, Felicity Emmett, commented: “The latest ANZ-Property council survey shows that confidence remains buoyant. A strong outlook for economic growth across the country, a very large pipeline of residential construction work and solid expectations for property prices are all supporting this confidence.”

“While new COVID restrictions are concerning, previous brief lockdowns have shown how resilient the economy and labour market is, suggesting that the outlook for the property sector is likely to remain very positive.” 

Note regarding recent state health orders:

The ANZ/Property Council industry survey for the June quarter was taken immediately prior to the state health order and consequent border changes around the nation.

There remains a strong need for National Cabinet to develop a roadmap for entry into and exit from ‘lockdowns’ and to accelerate purpose-built quarantine arrangements so that safe immigration of students and high-value workers can occur regardless of the status of vaccine roll out.

“Property industry confidence is a powerful boost for national economic activity but we must remain vigilant about keeping our position in the first rank of international competitiveness and as the first choice for international investment,” Mr Zorbas said.

“With the health restrictions around the country that followed swiftly on the heels of this survey, we need ever more efficient procedures for safely quarantining arrivals in Australia and for exiting necessary lockdown arrangements as swiftly as possible.”

“We welcome recent state measures to reactivate CBDs and we need government, business and the public service to work together to ensure the next rebound for our city centres around the country is even faster than the last.”

There were 874 respondents to the online survey between 7 June and 23 June 2021.

Key findings

  • National confidence levels decreased by 3 index points to 139 in the June 2021 quarter and is at its third highest level since the survey began.
  • National forward work expectations decreased from 53 to 48 over the June 2021 quarter.
  • National staffing level expectations decreased by 6 index points to 23 over the June 2021 quarter.
  • National economic growth expectations decreased to 33 index points.
  • Nationally, 56% of respondents believe the impacts of the coronavirus outbreak on their business will improve over the next 3 months, 39% of respondents believe there will be no change and 5% of respondents believe the impacts will get worse.
  • 64% of respondents believed the Hotels, Tourism and Leisure sector will continue to be the most severely impacted by the Coronavirus outbreak over the next three months, followed by commercial office (21%) and then shopping centres (9%).
  • Respondents from all states and territories tracked believed there will be an interest rate increase over the next 12 months.
  • There are reduced expectations that Australian house prices will increase over the next 12 months. National expectations sit at the second highest level since the survey’s inception at 64 points.
  • Australian office capital growth expectations increased over the June 2021 quarter but remains in negative territory at -10 index points.
  • National capital growth expectations for the industrial sector over the next 12 months decreased by 5 index points to 36 index points.’
  • National capital growth expectations for the retail sector have increased by 3 index points but all markets remain in negative territory. WA, SA, and ACT recorded decreased expectations, when compared to the previous quarter
  • Australian retirement living capital growth expectations increased over the quarter to 22 index points. Excluding SA and ACT, all markets recorded increased sentiment when compared to the previous quarter.
  • Sentiment for Australian hotel capital growth expectations increased by 10 points over the June 2021 quarter. Despite this, the national outlook for hotel capital growth remains in negative territory at -19 index points.
  • Confidence in the Federal Government’s role in delivering policies that encourage jobs and economic growth has decreased over the quarter. Over the June 2021 quarter, national sentiment decreased from 42 to 33 index points.
  • Respondents in all markets believe their respective state governments are doing a good job planning and managing growth, with the exception of VIC, ACT and QLD.
  • Prime cap rates are expected to grow over the next 12 months in all markets, with the exception of WA which was neutral.

To view select ANZ/Property Council Survey historical data series, visit the Property Council’s Data Room.

To find out more about the ANZ/Property Council Survey and our Supporting Sponsor RCP, visit: www.propertycouncil.com.au/confidence

Media contact: Henry Pike |  M  0408 406 637 |   E  [email protected]