The business outlook for the Victorian property sector has worsened, with new research showing a decline in sentiment amongst property and construction sector professionals.
The latest Property Council of Australia-ANZ Property Industry Confidence Survey shows Victorian respondents’ sentiment declined from 96 on the index for the June quarter to 93 for the September quarter.
The total index score for Australia was 106 for the September quarter. A score of 100 is considered neutral. The Survey polled more than 3100 professionals from the property and construction industry in all states and territories for their forward-looking views.
Victorian Property Council Executive Director, Jennifer Cunich, says Victoria’s index score reflects a growing level of pessimism about the property sector’s future. Victorian sentiment has declined for the fourth consecutive quarter, with Victoria 13 points below that recorded in New South Wales.
“Lifting sector confidence is one of Victoria’s biggest economic challenges,” Ms Cunich says. “Despite overall expectations of improvements in forward work, respondents remain pessimistic about the future.”
“Low confidence about the future is reflected in the sector’s worsening employment outlook, with staffing expectations falling from a score of 115 to 102 over six months. The property sector is presently Victoria’s second biggest employer with a workforce of over 310,000 people (FTE).”
“The property sector is calling on the State Government to help stimulate construction activity by bringing forward community infrastructure investment and simplifying the planning system.”
“The best way to boost property sector confidence is to put more cranes in the sky. The State Government can achieve this by accelerating the timetable of its planned infrastructure rollout.”
“Opportunities also exist for stimulating construction activity by simplifying Victoria’s antiquated planning system. Planning delays are one of Victoria’s most significant investment impediments.”
Victorian index score: declined from 96 in the June quarter to 93 in the September quarter;
NSW index score: declined from 113 in the June quarter to 106 in the September quarter;
Forward work: expectations for forward work in Victoria spiked upwards to 120 in the June quarter, a likely reaction to the interest rate cut, but have since dropped back to 115 for the September quarter; and,
Staffing expectations: expectations for forward staffing levels in Victoria have been trending downwards over the past 12 months. A year ago the index score for staffing expectations was 115 on the index, but was at 104 for the June quarter and 102 for the September quarter
ANZ Head of Property Research, Paul Braddick, says the soft Victorian economy was reflected in the fall in Victorian sentiment in the Survey.
“With a number of major public projects due to be completed in the coming half, and a broadly soft outlook for Victoria’s private sector economy, including residential and commercial property construction, the outlook for Victoria’s economy and property industry remains relatively soft, especially compared to the mining states,” Mr Braddick says.
“Nonetheless, underlying tightness in Victoria’s housing market and a diversified economy should soften the negative impact of the current headwinds.”
Jennifer Cunich, Property Council Victoria Executive Director
Ph: 03 9650 8300
Paul Braddick, ANZ Head of Property Research
Ph: 03 8655 3022