Waning optimism about South Australia’s Olympic Dam-driven resurgence and growing negativity about local and national economic prospects has taken the wind out of the local property sector’s sails, according to new survey results released.
The latest Property Council of Australia-ANZ Property Industry Confidence Survey shows industry confidence for the September quarter 2012for South Australian respondents has fallen dramatically, dropping from 112 to 98 on the index.
The survey polled more than 3100 professionals from the property and construction sector in all states and territories for their forward-looking views.
The local drop in confidence follows a nation-wide trend and demonstrates that ongoing speculation about a delay to BHP Billiton’s Olympic Dam expansion is adding to an overall sense of economic insecurity.
Property Council of Australia Executive Director for South Australia, Nathan Paine, says these uncertainties - combined with soft demand for housing and commercial development - were hitting the property sector hard.
“Earlier in the year, when approval of the Olympic Dam expansion looked imminent, we saw confidence surging,” Mr Paine says.
“Reports questioning the certainty of the project have undoubtedly helped to crimp confidence.”
“On top of that we’ve also got a seemingly endless tide of bad news coming from overseas. While many local indicators show Australia is to some degree insulated from the worst of the global headwinds, customers continue to sit on their wallets, making makes things even worse for local business.”
“This is manifested in the survey, with nearly 40 percent of respondents saying that state economic growth will be significantly weaker over the coming 12 months.”
“When new housing starts for 2012/13 are forecast to drop to almost historic levels, it’s clear the sector is facing some stark times.”
ANZ Head of Property Research, Paul Braddick, says while expectations for the residential property market remain weighed down by weak sentiment, soft employment growth and a balanced housing market, the Survey result was also driven by an uncertain outlook for commercial property.
“While non-residential property market activity will be supported by a number of large non-residential building redevelopments in Adelaide (Royal Adelaide Hospital, Adelaide Convention Centre and Adelaide Oval), uncertainty over the future of the Olympic Dam project muddies the economic outlook, particularly for the regions and sectors exposed directly to the mining and energy industries,” Mr Braddick says.
Mr Paine says the Survey revealed some bright points amongst the gloomy news.
“The State Government and Adelaide City Council have agreed on historic CBD zoning reforms, as well as the State Budget’s stamp duty reforms and extension of the First Home Buyer Bonus - these will start to bear fruit for the sector over the next 12 months,” Mr Paine says.
“But overall, the State Government should view these results for what they are and recognise that if this trend continues the property sector will need even more support to ensure that hard-working South Australians don’t continue to suffer.”
“The property industry is the biggest private sector employer in the state and a critical contributor to the overall health of the state’s economy. If we are to lift the state out of this downturn the property sector must be encouraged to thrive.”
Nathan Paine, Property Council SA Executive Director
Ph: 0448 445 177
Paul Braddick, ANZ Head of Property Research
Ph: 03 8655 3022