Confidence in the NSW property industry is slowly starting to build, a new survey has revealed.
The Property Council of Australia-ANZ Property Industry Confidence Survey shows the confidence index rose from 105 for the March quarter to 113 for the June quarter.
The survey polled more than 2300 professionals from the property and construction sector in all states and territories, including 622 from NSW.
“The survey points to a gradual increase in confidence in NSW, as the acute concerns over global economic conditions soften,” Property Council Acting NSW Executive Director Edward Palmisano says.
Over the next twelve months, 61.1 percent of respondents expected to increase their forward work schedule, 83.6 percent thought that staff levels would stay the same or increase, and 43.2 percent predict a reduction in interest rates.
The survey pointed to strong expectations about office capital growth, with 83.7 percent of respondents predicting that commercial office capital values would stay the same or increase over the next twelve months.
Confidence in house price growth also rose, with 74.6 percent of respondents predicting that residential capital values would stay the same or increase in the coming year.
ANZ Head of Property Research, Paul Braddick, says positive perceptions of NSW property continue to be driven by tightening fundamentals in both residential and commercial markets, which are driving rents higher.
“Improved housing purchase affordability, tight market conditions and increasing rents should encourage both first home buyers and investors into the purchasing market,” Mr Braddick says.
“As a result, prices and capital values should edge higher through the second half of 2012. However, weak household sentiment and a subdued economic outlook will continue to weigh on house prices, commercial property capital values and confidence in the near term.”
Yet the survey revealed persistent concerns about the domestic economy, with NSW respondents identifying domestic economic conditions as the most significant factor that would influence business decision making over the next 12 months.
Mr Palmisano says the survey drew out local factors affecting the property industry, with the planning system seen as a significant barrier to investment in NSW.
Almost half (49.2 percent) of all respondents thought NSW was not doing a good job in planning and managing growth.
“The slow return of confidence shouldn’t be taken for granted. It highlights the urgency and stakes involved in the review of the State’s planning and development assessment systems,” Mr Palmisano says.
“NSW needs to re-boot the planning system to make it more responsive to investment through a simpler and more efficient set of rules, as well as cultural reform.”
Reflecting concerns about the impact of the carbon price, more than half of NSW respondents (50.2 percent) thought that construction costs would increase in the state over the next 12 months.
“The property sector is critical to our economic prosperity as it drives 10 percent of the state’s wealth and employs more people than any other industry,” Mr Palmisano says.
“The NSW Government should take care not to dampen the sector’s newly returning confidence. It should provide a policy platform that gives industry certainty, stability and leadership to build a new era of economic prosperity in NSW.”
Edward Palmisano, Acting Executive Director NSW, Property Council of Australia
Ph: 0403 500 084
Paul Braddick, Head of Property Research, ANZ
Ph: 03 9273 5987