Property industry confidence hits record high
Confidence across Australia’s property industry has surged to its highest level in the six-year history of the ANZ/Property Council Survey, but it’s not all “smooth sailing” warns senior economist Daniel Gradwell.
The survey, which is the largest of its type in Australia, measures the views of more than 1,000 property professionals, and is a quarterly litmus test of the industry’s confidence.
The index for the June quarter has climbed four points to 143 – the highest on record. A score of 100 is considered neutral.
Property Council chief executive Ken Morrison says the results are “cause for optimism”.
“We’re seeing confidence across the industry at elevated levels in all states and territories, with South Australia, Queensland and the ACT the stand-outs,” Morrison says.
ANZ’s senior economist Daniel Gradwell says the “convergence across the country” continues. Gradwell points to South Australia, previously a “quiet achiever” which is “now the most optimistic region in Australia”.
The state-by-state statistics paint a rosy picture.
South Australia posted a 10-point increase, rising from 138 to 148 over the quarter. Property Council executive director Daniel Gannon attributes the surge in confidence to the change of government, and says it is “unashamedly good news” for the state’s economy and investment prospects.
“Confidence levels are more than 30 points above South Australia’s historic average, setting a new national benchmark,” Gannon adds.
Victoria, which is only one point behind South Australia, recorded a confidence score of 147, up from 145 the previous quarter.
Matthew Kandelaars, the Property Council’s deputy executive director in Victoria, says the robust figures show industry’s appetite to work with government, particularly around housing supply and affordability.
Australian Capital Territory
In the ACT, confidence rose from 137 to 144, a result which Adina Cirson, ACT executive director, says demonstrates growing confidence in forward work schedules, staffing expectations, housing and office market growth. Among the results is a 15.9 increase in staffing level expectations.
“This means the sector is feeling more confident about locking into labour costs and is feeling very confident about hiring more staff,” Cirson explains.
In Western Australia, “green shoots” are translating into more work, says Western Australian executive director Lino Iacomella, after the state’s confidence rose from 140 to 143.
“Business confidence in the WA property industry is at the highest level in five years and only a few index points below the peak of 2013.”
New South Wales
With a score of 141, NSW posted a one-point increase, up from 140 the previous quarter. NSW executive director Jane Fitzgerald says the state is “coming off a very high peak” and “consumer-driven sectors such as residential and retail are contracting”. Retail expectation dropped by three index points, with NSW the only state to record negative capital growth in the sector.
Fitzgerald says there are “flow on effects”. Expected staffing levels have fallen for the past four quarters, which is a “worrying trend given the property industry is one of the state’s biggest employers”.
Confidence rose by seven points in the Sunshine State, increasing from 132 to 139 over the quarter. Queensland executive director Chris Mountford says sentiment has increased by 13 index points over the last 12 months, and attributes this to infrastructure projects such as Cross River Rail.
“With major projects underway across both the public and private sectors, this is a very exciting time for Queensland,” Mountford says, although cautions that, Queensland still posted the lowest sentiment in the country. “The industry remains concerned about the direct impacts of the Queensland Government’s land tax increases,” Mountford says.
Meanwhile, the ANZ’s Gradwell says the outlook for the housing sector is improving.
“Expected construction activity has slowly picked up, and a large backlog of work will underpin activity this year. Price expectations are also stabilising in positive territory, with the exception of New South Wales.”
It’s not all “smooth sailing”, though, Gradwell warns.
“The retail sector has been under pressure for some time, and respondents are increasingly pessimistic about the outlook for the next 12 months. Expectations of price growth and construction activity are falling, and any improvement feels some time away.”
After negative sentiment around the federal government’s performance for six quarters, there has been a lift across all states and territories.
Property Council’s Ken Morrison says “getting the policy settings right” – improving planning, cutting red tape and providing policy certainty – “doesn’t cost the budget bottom line but does deliver a real boost to confidence which in turn drives investment, expenditure and employment”.
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Congratulations to Corey Scidone from Mirvac, winner of the ANZ/Property Council Survey competition, who takes home a brand new Apple HomePod.