Property industry confidence hits record high
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Confidence across Australia’s property industry has surged to its highest level in the six year history of the ANZ/Property Council Survey.
Confidence across Australia’s property industry has surged to its highest level in the six year history of the ANZ/Property Council Survey according to results for the June 2018 quarter.
The survey is the largest of its type and measures the views of more than 1,000 property industry professionals across the country. It provides valuable insight into sentiment in the property industry which employs 1.4 million Australians and supports the wages of more than one in four Australians.
‘Given the economic significance of the Australian property industry, the results from this survey are cause for optimism,’ said Ken Morrison, Chief Executive of the Property Council of Australia.
‘Getting the policy settings right for the property industry such as better planning, cutting red tape and providing policy certainty don’t cost the budget bottom line but does deliver a real boost to confidence which in turn drives investment, expenditure and employment,’ Morrison said.
The national confidence index for the June quarter has climbed four points to 143 – the highest on record. A score of 100 is considered neutral.
After negative sentiment around the Federal Government’s performance for the past six quarters, there has been a lift for the June 2018 quarter from across all the states and territories surveyed with a matching rise in confidence in the national economic outlook.
‘We’re seeing confidence across the industry at elevated levels in all states and territories, with South Australia, Queensland and the ACT the stand-outs in terms of improvement this quarter. Expectations around economic growth in South Australia and Queensland have especially strengthened this quarter.
Australia-wide, there are positive expectations around capital growth for retirement, office, industrial and hotel property, although a drop for retail which is reflected across all the markets surveyed. Housing prices are expected to increase in all capitals except Sydney.
Sentiment around construction activity in the retirement, hotels, office and industrial sectors is strongest, with a decline in retail and a slight lift in residential. Sentiment for residential construction is down 4.9 points and 12 points for retail over the 12 month period to June 2018.
There is a widespread expectation of an increase in interest rates during the next 12 months although the survey shows less concern about the availability of debt finance than the last quarter.
Cities and infrastructure is now the most critical issue for the Federal Government, surpassing economic growth. This is followed by housing affordability, economic growth, tax reform, energy efficiency and global capital.
Daniel Gradwell, ANZ Senior Economist, said the June quarter survey result shows that the optimism in the property sector has continued into 2018. Nationwide confidence rose to the highest level on record, with improvement across all states and territories.
‘The convergence across the country continues. We have previously highlighted the trend improvements in Western Australia and Queensland, but South Australia has been a quiet achiever, and is now the most optimistic region in Australia,’ Mr Gradwell said.
‘The outlook for the housing sector is improving. Expected construction activity has slowly picked up, and a large backlog of work will underpin activity this year. Price expectations are also stabilising in positive territory, with the exception of New South Wales.
‘But it’s not all smooth sailing. The retail sector has been under pressure for some time, and respondents are increasingly pessimistic about the outlook for the next 12 months. Expectations of price growth and construction activity are falling, and any improvement feels some time away,’ Gradwell said.