Property underpins economic transition, finds survey 

Confidence levels rise in most states as property continues to underpin Australia’s economic transition, but it’s still a state-by-state story, reveals the latest quarterly ANZ Property Council Survey.

The sentiment survey of more than 1,800 people across the property industry – the largest of its kind – found a slight increase in confidence over the quarter, from 128 index points in September to 130 in December 2016. A score of 100 is considered neutral.

Property Council chief Ken Morrison says the survey results are heartening, but do reflect the state-by-state market story currently playing out across the country.

“New South Wales and Victoria continue to be the economic powerhouses in terms of confidence, economic growth expectations and forward work schedules,” Morrison says.

“If there are red and amber lights among the states it is the sentiment in Western Australia and Queensland.”

In NSW, industry confidence has dipped marginally over the past 12 months – from 144 down to 142 – but remains significantly ahead of the national average.

Jane Fitzgerald, the Property Council’s executive director in NSW, says while confidence remains steady, there are some signs of softening.

“The NSW economy relies on a strong housing market, and we hope to see action to address constraints on the industry to build confidence and new homes for our state,” Fitzgerald says.

While confidence in Victoria rose by two points to a healthy 139, executive director Sally Capp says the local property industry has mixed views about the future as a result of declining credit access and rising taxes.

“Tightening credit conditions are causing angst in an industry already grappling with spikes in land tax, rates, stamp duty and the fire services property levy,” Capp says.

The ACT’s industry is “cautiously optimistic” says acting executive director Belinda Ngo, after a seven-point increase in sentiment was recorded over the 12 months to December 2016.

“The ACT results show very positive signs for the city, with growth projected in forward work schedules and asset values across all property sectors,” she says, adding that the volatility in the results from quarter to quarter suggests the local business environment remains fairly fragile.

In Queensland, a decline of 12 index points indicates a need for greater activity from government, argues the state’s executive director, Chris Mountford. He says confidence demands “stable policy-making and strong government investment in new infrastructure – two ingredients not currently in abundance in Queensland.”

Mountford believes the new tax on foreign investors in residential property has “sent the wrong message” and has had a “definite impact on industry attitudes to doing business in Queensland at an acute time for the market.”

In South Australia, confidence levels have gone backwards, which Daniel Gannon says “demonstrate the importance of maintaining a barefaced focus on restructuring policy settings around tax, planning, defence, nuclear and local government”.

In WA, the first upswing in confidence since June 2013 is a good sign, although Lino Iacomella points out that, with a score of 104, the state still has the lowest confidence level in the country.

The property market is “stabilising”, Iacomella says, and an “expectations of an economic turn-around for the industry” are growing.

According to Richard Yetsenga, ANZ’s chief economist, the survey reveals a more optimistic outlook across the industry.

While the “outlook for commercial property is still more positive than the residential sector”, 27 per cent of respondents expect conditions across the entire sector to improve over the next 12 months, up from 27 per cent in the previous quarter, Yetsenga says.

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