Industry sentiment outlook
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 points on the national confidence index in June 2018, confidence has fallen to 138 points for the September 2018 survey. A score of 100 is considered neutral, indicating a broadly positive outlook for the industry.
The decline reflects softening expectations in New South Wales (down to 134 from 141 the previous quarter) and Victoria (a fall of six points to 141).
In comparison, South Australia has consolidated its nation-leading optimism, adding one point in the latest survey to reach 149.
Queensland remains relatively steady (down one point to 139), while Western Australia and the Australian Capital Territory also recorded dips in confidence (four- and eight-point declines, respectively).
The Property Council’s chief executive Ken Morrison says the numbers are “still squarely in positive territory”. But he warns policy makers to “take stock of these results, given the significance of the property industry as a driver of investment, jobs and economic activity”.
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 influenced capital growth expectations in the residential sector.
In comparison, capital growth expectations for the office, industrial, hotels and retirement living sectors are largely positive. Expectations for the retail sector remain relatively neutral.
Construction activity expectations in the retirement living sector are well above all other sectors, with forward work schedules in the residential sector declining by 10.5 index points over the quarter and dropping below all other sectors.
South Australia recorded the highest confidence in 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’ planning and growth management.
According to David Plank, ANZ’s head of Australian economics, the survey gives a “mixed report” and highlights weaknesses in the housing market, although there is optimism in the commercial sector.
Plank says the survey results support the bank’s view that house prices are “set for a sustained decline”, driven by tightening lending conditions.
“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 six-to-12 months,” Plank adds.
View select ANZ/Property Council Survey data in the Property Council’s Data Room, or find out more about the survey and our supporting sponsor RCP.
Congratulations to Robert Dodson from JLL, winner of the ANZ/Property Council Survey competition, who takes home a brand new Apple HomePod.