Property industry sentiment across Australia has fallen for the second consecutive quarter with drops in expectations across several key indicators including forward work and staffing levels.
The industry’s confidence barometer, the ANZ/Property Council Survey, shows a 12-index point decline in national industry sentiment for the December quarter, falling to 126 points. A score of 100 is considered neutral.
The Property Council’s chief executive Ken Morrison says “sentiment, while still positive, is softening in critical areas across an industry that is Australia’s biggest employer and supports 1.4 million jobs”.
“This shift in sentiment needs to be on the radar of policy makers because now, more than ever, we need strong investment, tax and planning regimes to keep the economy strong.”
David Plank, ANZ’s head of Australian economics, says the survey “gives a pretty soft read on Australia’s property sector”.
“The downturn in the housing outlook is significant, although not surprising,” Plank says.
“The second consecutive fall in the commercial property space is something we will be watching,” he says, adding that a further downtown could “pose a challenge to our outlook for non-mining business investment.”
While sentiment is still in the positive range, the index has fallen from 143 in the June 2018 quarter and 138 for the September 2018 quarter. The result is 15 index points lower than the same time last year, and the lowest level since September 2013.
For the first time in four years, all markets tracked recorded a quarterly decrease, with Victoria (-15) and New South Wales (-14) posting their largest quarterly decreases since the survey’s inception in 2011.
Overall sentiment remains strongest in South Australia at 144 index points, followed by the ACT and Western Australia. Confidence in Queensland fell by 12 points.
Forward work schedules and staffing level expectations have both fallen in parallel for the first time, with a six-point drop for both indicators.
Expectations around national economic growth have fallen into negative territory for the first time in three years, dropping by 12 index points to –3.
The survey was conducted prior to the release of the interim report of the Financial Services Royal Commission at the end of September but shows a further decline in expectations around debt finance availability to a record low level.
Latest official lending figures from the Australian Bureau of Statistics, released on Friday, revealed the number of home loan approvals for owner-occupiers fell by 2.1 per cent and for investors by 1.1 per cent, in seasonally adjusted terms, in August.
The outlook across most commercial property sectors, however, continues to be broadly positive although capital growth expectations across offices, industrial, hotels and retirement living all declined for the quarter.
The ANZ/Property Council survey is based on responses from more than 900 property industry participants. The survey was conducted between 3-19 September 2018.
To find out more about the ANZ/Property Council Survey, view historical data and learn more about supporting sponsor RCP, visit the Property Council website.
Congratulations to Nicholas Van Beek from EY, winner of the ANZ/Property Council Survey competition, who takes home a brand new Apple Watch.