After topping the state for economic confidence over the last 2 quarters, the Hunter region has slipped behind Sydney and the Illawarra on a range of indicators. The survey reveals the Hunter remains a microcosm of the nation’s “patchwork economy”.
The Property Council of Australia-ANZ Property Industry Confidence Survey polled 2355 property industry professionals across the nation in December, including from the Hunter.
While Newcastle again claimed first spot for confidence in the strength of forward work (90.5%) and economic growth (34.9%), there were worrying signs.
The state political environment, planning controls and infrastructure gaps are seen as the biggest impediments to business decision making in the Hunter over the next 12 months.
Property Council NSW Regional Director – Hunter, Andrew Fletcher, says: “68.3% of industry professionals told us residential construction activity has now stalled, so a high priority must be a strong Regional Strategy that coordinates planning across Government and ensures these opportunities for economic growth are maximised.”
ANZ Head of Property Research, Paul Braddick, says although the Survey Index reveals an increasingly positive view of the NSW property market, weak household sentiment and a subdued economic outlook will continue to weigh on house prices, commercial property capital values and confidence through the remainder of 2012.
“Positive perceptions of NSW property continue to be driven by tightening fundamentals in both residential and commercial markets, driving rents higher,” Mr Braddick says.
“Improved housing purchase affordability, tight market conditions and increasing rents should encourage both first home buyers and investors into the purchasing market. As a result, prices and capital values should edge higher through the second half of 2012.”
Mr Fletcher says the survey also drew out local factors affecting the industry, such as continuing uncertainty over the future of the rail line that cuts Newcastle’s CBD in half.
“The private sector wants to drive urban renewal in the heart of Newcastle, but it will not do so until there is certainty around the future of the heavy rail corridor and a new planning framework for the CBD,” he says.
“The status quo is no longer an option. Decades of inaction have seen the CBD deteriorate and hundreds of millions of dollars in private investment lost.”
“The new Government has a strong mandate to intervene.”
External factors, such as a high Australian dollar and turbulent global financial markets were also dampening the mood of the Hunter’s property sector.
38.1% of Hunter respondents cited the availability of debt finance would decrease over the next 12 months, the highest level in NSW.
36.5% said industrial assets had the greatest potential for providing a return, while 33.3% said capital values for hotel, tourism and leisure assets would decrease over the next 12 months.
"The property sector is critical to the Hunter’s prosperity as it provides 12% of all jobs and directly contributes $3.6 billion to regional economic growth,” Mr Fletcher says.
Andrew Fletcher NSW Regional Director – Hunter, Property Council of Australia. Ph: 0407 410 017
Paul Braddick, Head of Property Research, ANZ. Ph: 03 9273 5987