Survey reveals WA resilience
West Australian property industry participants are the most buoyant in the country about the impact of the Federal Government’s $25,000 HomeBuilder scheme.
ANZ/Property Council Survey for the September 2020 quarter found that nationally the outlook for residential construction industry swung into positive territory. However, the impact of HomeBuilder across the country was uneven, with Victorian residential developers expecting falls while those in WA anticipated a dramatic expansion.
ANZ senior economist Felicity Emmett said the upswing in WA (to 48 points in the September 2020 quarter, up from 4.8 points in June 2020 and 9.6 points in September 2019) was likely to be linked to the WA Government’s extra stimulus, the $20,000 Building Bonus, which meant WA first-homebuyers were eligible for up to $69,000 in grants.
WA respondents, who had been anticipating a long-awaited recovery when the coronavirus pandemic hit, reported the second-highest level of optimism of any other State and Territory and the smallest proportion of respondents believing things would get worse.
The survey, between 15 June and 1 July, 2020, revealed a surge in sentiment, with WA confidence rising to 82 points for the September quarter, up from 63 points in June.
Across Australia the survey reflected concerns about the impact of the pandemic on forward works, staffing levels and national and State economic growth. Of those surveyed Australia-wide, 45 per cent said their business had relied on the Federal Government’s JobKeeper program and 55 per cent said the Federal Government should extend JobKeeper beyond its September 27 cut-off date.
In WA, expectations for capital growth are negative across all sectors, with retail and hotels, tourism and leisure the hardest hit. The September quarter survey revealed elevated levels of concern about commercial office and residential capital growth, which had deteriorated since June. However, WA respondents reported the strongest outlook for residential construction activity over the next 12 months indicating that Federal and State government incentives for housing are driving confidence.
WA respondents had the worst office capital growth expectations in the country, falling from negative 48 to negative 75. One explanation includes the impact of the Commercial Tenancies Code of Conduct and the fallout of having land tax relief hurdles set beyond the reach of most WA landlords. Expectations for industrial improved from negative 28 to negative 9. Hotels from negative 82 to negative 75 and retirement living also improved from negative 19 to negative 7. Retail capital value expectations deteriorated further from negative to negative 64.
Property Council WA Executive Director Sandra Brewer said the full benefit to be delivered by the WA Government’s $20,000 Building Bonus – on top of the Federal Government’s $25,000 HomeBuilder – was likely to underpin an improvement in December quarter sentiment.
“The response of Premier Mark McGowan’s State Government to the crisis has been decisive and effective, ensuring the WA property industry is best placed to recover and retain jobs,” Ms Brewer said.
“Further policy reform is important to eliminate obstacles to job-generating projects. The State recovery effort is far from over and we look forward to further planning reform and work to extract the best possible economic outcome from a City Deal for Perth.”
Property industry respondents cited economic management, cities and infrastructure delivery, tax reform and housing supply and affordability as the four most critical Federal Government issues.
For State Governments, the most critical issues were property charges and taxes, planning and regulation, housing supply and affordability, development around transport and vibrant city centres.
To view full results from the latest ANZ/Property Council Sentiment survey, click here.