Overall confidence in the WA property sector has lifted for the third consecutive quarter, according to the latest Property Council-ANZ Property Industry Confidence Survey.
The WA index within the Survey rose to 144 for the June quarter, up from 127 for the March quarter. Only the Northern Territory (159) recorded a higher confidence index for the June quarter. Nationally, the June index was 113, up from 107 in the previous quarter. (Note: see attachment for State rankings).
The Property Industry Confidence Survey polled more than 2300 property industry professionals across all Australian states and territories. It canvassed forward expectations for the June quarter over a range of business outcomes in the property industry, including staffing levels, investment yields, property values, construction activity, future work orders, and general economic conditions.
Property Council of Australia WA Executive Director, Joe Lenzo, says the latest survey shows that confidence is returning to the WA residential sector.
“12-month capital growth expectations for the WA residential sector have shown a sharp turn-around, with the June index at 17, up from -4 in the March quarter. Confidence has been boosted by rental market data which shows that the vacancy rate for rental accommodation in Perth is as low as 1.6 percent,” Mr Lenzo says.
ANZ Head of Property Research, Paul Braddick, says: “While house prices are currently 8.2 percent below their March 2008 peak, the outlook for house prices is positive, with 85 percent of survey respondents expecting house prices to remain unchanged or increase in the next year.”
The Survey results also show a large majority of respondents expect commercial office (71 percent) and industrial property (66 percent) construction activity to increase over the next year.
“The economic benefits of significant WA mining infrastructure spending and tight market fundamentals should also drive solid growth in construction activity through 2012, particularly in the commercial office and industrial sectors,” Braddick says.
Mr Lenzo says while commercial office was the standout, the hotel &leisure sector should not be ignored.
“WA office property continues to outperform other states, with the strongest expectations for CBD office demand in Australia. The net balance of WA CBD office demand expectations for the June quarter was 45, up from 37 in the previous quarter. The national index continues to languish at less than 5,” he says.
“Hotels, tourism and leisure capital growth expectations have shown a remarkable turn-around, recording an index reading of 15, up from -11 in the March quarter,” Mr Lenzo says.
He says the survey also found that almost half of respondents believe the State Government is doing a good job in planning and managing growth in WA. Only 27 per cent believed that the State Government wasn’t performing.
“These results show that the WA planning system has improved, but in order to be the best in Australia the WA Government needs to address issues like local council consistency in planning schemes and development codes, and it must minimise the need for development referrals,” Mr Lenzo says.
Despite good news about capital growth expectations, the Survey index recorded expectations of strong increases in construction costs.
“The WA construction costs expectations index for the June quarter was 57, up from 40 in the previous survey period. This was much higher than the national index, which recorded 27 for the June quarter, up from 22 for the March quarter,” Mr Lenzo says.
For comment:
Joe Lenzo Executive Director, Property Council of Australia, Ph: 08 9426 1200 or 0419 044 768
Paul Braddick, Head of Property Research, ANZ, Ph: 03 9273 5987
Lino Iacomella, Deputy Executive Director, Property Council of Australia, Ph: 08 9426 1200 or 0417 501 974
