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ANZ/Property Council Survey for September 2018

Continued optimism in the commercial sector and a softening outlook for residential property are among the key findings in the ANZ/Property Council Survey for the September 2018 quarter.

Following a record high of 143 for the national confidence index for the June 2018 quarter, the September quarter index has dropped to 138. A score of 100 is considered neutral, indicating a broadly positive outlook for the industry.

South Australia is leading the nation in overall industry confidence, up by a further index point over the previous quarter to 149. Confidence in Victoria recorded its largest single quarterly fall, down by six index points on the previous quarter.

‘While these numbers are still squarely in positive territory, policy makers need to take stock of these results, given the significance of the property industry as a driver of investment, jobs and economic activity.’ said Ken Morrison, Chief Executive of the Property Council.

‘The property industry has played a big part in supporting the economy’s transition from the end of the mining investment boom, so this survey is an important leading indicator.

‘Our industry, Australia’s largest which supports 1.4 million jobs across, looks to government for policy certainty so it can plan for investment decisions and the long-term growth of businesses which in turn support economic growth and jobs in communities across Australia.

‘While expectations remain broadly positive across a range of measures and sectors, including expectations around forward work schedules, staffing levels, economic growth, and most categories of capital growth, there are some areas where expectations are softening.

‘There has been a noticeable decline in expectations for economic growth in NSW which have dropped to its lowest level in four years, compared to WA and SA where expectations continue to be strongly positive as both states continue their economic transition journeys,’ Mr Morrison said.

There has been a significant decline across all markets on expectations around the availability of debt finance.

The survey confirms the negative sentiment around growth in house prices in NSW and Victoria which have fallen to -37 and -11 index points respectively. This has clearly impacted expectations for national house capital growth which has moved into negative territory at -6.2 index points for the September quarter.

Capital growth expectations for the office, industrial, hotels and retirement living sectors are all positive, although NSW, Victoria and the ACT recorded large falls in office capital growth expectations. Hotel capital growth expectations again moved into negative territory in WA. National retail capital growth expectations again decreased in the September 2018 quarter and are now relatively neutral.

Construction activity expectations in the retirement living sector are well above all other sectors, with residential construction expectations declining by 10.5 index points over the quarter and dropping below all other sectors. Both residential and retail construction expectations have fallen over the 12-month period to September 2018.

South Australia is the stand-out leader in terms of views about State Government performance, reaching a record high of 19.1 index points. Respondents from Queensland and the ACT had the least confidence in their governments with regards to planning and managing growth.

At the federal level, there was increased confidence in the government’s performance with the strongest result from South Australia, followed by Queensland and the ACT.

Cites and infrastructure continue to be the most critical issue facing the Federal Government for survey respondents, followed by housing affordability, economic growth, tax reform (a slight increase from the previous quarter) and energy efficiency and global capital.

ANZ’s Head of Australian Economics, David Plank, said: “The ANZ/Property Council Survey for the September quarter gives a mixed report on Australia’s property sector. The survey is the latest of many indicators that highlight the current weakness in the housing segment, although the optimism in the commercial property space is encouraging.

“The survey results support our view that house prices are set for a sustained decline. Respondents from within the housing sector share that outlook, especially in relation to Sydney and Melbourne. The construction outlook is also softening.

“The survey’s negative outlook for credit availability supports our view that this is driving the recent weakness. The decline in credit availability recorded by this survey in 2015 proved to be a good leading indicator of the subsequent fall in building approvals. We think it will prove so again, meaning that a steep fall in building approvals is likely over the coming 6–12 months,” Mr Plank said.

 

Media contact: Matt Francis | M 0467 777 220 | E mfrancis@propertycouncil.com.au

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