New figures released by the Property Council of Australia (Tasmania) reveal the confidence of the Tasmanian property industry is the lowest in the nation by a big margin.
Results from the inaugural Property Council/ANZ Property Industry Confidence Survey taken in September 2011 show 55 per cent of survey respondents expect Tasmania’s economic growth to be weaker or significantly weaker over the next quarter, compared to the current one.
“Tasmania’s political environment and weakening economic growth, combined with barriers such as planning, development decision making and general business conditions has had a lethal effect on the Tasmanian property industry’s confidence,” Mary Massina, Property Council Tasmania Executive Director, says.
The survey asked members from across the property industry in each State and Territory to rate a number of key indices such as employment, economic growth, capital values, construction costs, investment issues and barriers, as well as indicate whether they support the introduction of a carbon pricing scheme.
“When compared to other States and Territories, Tasmania’s confidence really has hit rock bottom,” Ms Massina says.
According to ANZ’s Chief Economist Warren Hogan, poor confidence in the property sector reflects local, national and global trends sapping economic momentum from the state’s key industries.
Property Council Executive Director, Mary Massina says this was exacerbated by a lack of progress on key government reforms.
While it is startling to see where Tasmania sits in comparison with other States and Territories, it clearly demonstrates what the Property Council and the industry have been saying for a long time.
“Key reforms of local government, planning and taxation need to happen immediately to give the property industry some confidence back.”
“Despite the release of the State Government’s Economic Development Plan, which was supposed to provide a clear strategy for economic growth, the property industry, Tasmania’s biggest private sector industry, isn’t feeling the love.”
The survey showed there was an expectation that capital values across the residential, tourism and leisure sectors would decrease while commercial office, industrial and shopping centres would remain the same, with retirement living potentially being the only shining light at the end of the tunnel.
“With an expected decrease in construction costs over the next 12 months, respondents reported that the residential, commercial office, industrial, shopping centres and tourism and leisure construction cycles had stalled,” Ms Massina says.
“Again, retirement living was the only sector in which construction was predicted to rise.”
“Of the top three issues influencing the respondents’ business decision making over the next quarter, 67.2 per cent saw the State political environment as key, followed by domestic economic conditions at 58.4 per cent and the federal political environment at 33.6 per cent.”
“Interestingly the three greatest perceived barriers to property investment in Tasmania were general business conditions at 59.5 per cent, followed closely by planning legislation at 57.9 per cent and development assessment processes at 49.6 per cent.”
In terms of being competitive, 43 per cent believe that Tasmania’s rates of business tax are high.
“On the key question of support for a carbon pricing scheme, respondents mirrored the general community with 37.2 per cent saying no, 33.1 per cent supportive and 29.8 per cent unsure.”
“What this confidence survey clearly demonstrates is that the State Government must show leadership and heed the property industry’s clarion call for reform.”
Given the industry generated directly and indirectly some $5.6 billion in economic activity in 2009/10, the Government has no choice but to work hard to regain the confidence of the industry in this State.
“Let’s see whether the Government takes this confidence survey seriously and works with the largest private sector industry to bring back confidence,” Ms Massina says.
Tasmania’s sector confidence was the lowest in the nation according to the Property Industry Confidence Index which ranked comparative confidence in each state and territory. The Index table is attached on the following page.
“Tasmanian respondents, on balance, had a quite pessimistic view of property markets with an index reading of just 87.7,” says Warren Hogan, ANZ’s Chief Economist.
“To a large extent this reflects the uncertain economic prospects for the Tasmania economy.
“Doubts over major investment projects (in particular the Gunns Pulp mill), subdued tourism flows and weak population growth continue to weigh on both residential and commercial property.”
Mary Massina, TAS Executive Director, 0408 594 312
Warren Hogan, ANZ Chief Economist, 0414 498 675