Property professionals see house prices stabilising and their own forward work schedules lifting, according to a new study.
The Property Council of Australia-ANZ Property Industry Confidence Survey shows sentiment rose from an index score of 107 to 113 for the June quarter, coinciding with a less uncertain outlook for the global economy.
The survey polled more than 2300 professionals from the property and construction sector in all states and territories for their forward-looking views.
“Overall the industry is more confident as acute concerns over global economic conditions ease,” says Property Council Chief Executive, Peter Verwer.
“Respondents are feeling less buffeted than in previous quarters, where the storm in commodity prices, global economic insecurity and domestic political uncertainty contributed to negative sentiment.”
“However regional disparity has become starker, with confidence in the resource-rich states pulling further ahead, Victoria noticeably flat and Tasmania declining further.”
“More than half the quantifiable lift in sentiment is attributed to three states - Western Australia, the Northern Territory and Queensland - despite the fact these states account for less than a third of the nation’s population.”
ANZ Chief Economist, Warren Hogan, says while Australia’s mining and engineering-construction sectors boom, retail spending, non-mining related manufacturing, public services and tourism will remain under pressure.
“The near-term risks to official interest rates remain skewed to the downside and will be determined largely by inflation expectations and the labour market,” Mr Hogan says.
Key findings for the Property Council-ANZ Property Industry Confidence Survey are:
Uplift in overall confidence: the survey confidence index rose from 107 for the March quarter to 113 for the June quarter.
Resource states forge ahead – NT, WA and Qld: the biggest positive gains were felt in the resource-rich states, now streets ahead of national confidence levels.
Mid-pack lifting – NSW, SA and ACT: NSW sentiment took a significant step up this quarter after a slight drop in the previous survey, SA confidence rose again, and the ACT shifted from negative to positive sentiment in this survey.
Red flag states – Victoria and Tasmania: these were the only states to post a decline in overall confidence. Tasmania slid dramatically from 85 to 73 on the Index, while Victoria was noticeably flat at 96 (a position of 100 is considered neutral on the Index).
More confidence in obtaining funding: while sentiment about securing debt finance is still negative overall, respondents are now less pessimistic. Expectations for debt finance availability shifted from -15.5 on the index to -4.9.
Residential prices stabilising: confidence in house price growth has risen for the second consecutive quarter and is now almost neutral on the Index. Queensland and the ACT have shifted from a negative outlook to positive.
Shopping centres bucking the trend: confidence in 12-month capital growth is up or stable in all sectors, with the exception of shopping centres. The negative sentiment here did not translate into a negative view on retail construction activity, which is still positive.
Work to increase, but hiring intentions not as strong: with the exception of Tasmania, survey respondents anticipate their own future work levels will increase but are becoming less positive about their own hiring intentions.
State governments must do better: half of the respondents disagreed with the proposition that their state or territory government was doing a good job in planning and managing growth, and only 17% agreed. Honourable mentions go to the WA and NT governments for their more positive scores.
Property Council Chief Executive Peter Verwer says survey respondents were asked their views on the performance of their state or territory government for the first time.
“Property professionals give their governments a ‘fail’ in planning and managing growth,” Mr Verwer says.
“Top marks went to the WA Government, which has embarked on a broad planning reform program, clear planning strategies and new implementation vehicles to get things done. Other states should take note.”
“It is clear that property leaders are less pessimistic about the global economy, which is translating into greater confidence in Australia’s economy, but they are still hesitant about hiring for growth.”
“While Victoria only declined one point on the index over the period, it is concerning that confidence in Australia’s second-largest property market should remain flat while sentiment in most other states increases,” Mr Verwer says.
ANZ Chief Economist, Warren Hogan, says Australia’s commercial property market is very well placed and remains at the early stages of a multi-year cyclical upturn in valuations.
“Limited new supply, solid demand and tight vacancy – combined with a rebound in economic growth – suggest significant upside to rents,” Mr Hogan says.
Peter Verwer, CEO, Property Council of Australia
Ph: 0407 463 842
Warren Hogan, Chief Economist, ANZ
Ph: 0414 498 675