The confidence of Tasmania’s biggest private sector industry continues to slide and, for the second quarter in a row, is still the lowest in the country, according to the latest Property Council-ANZ Property Industry Confidence Survey.
2800 property industry professionals across all Australian states and territories were polled in December 2011, indicating domestic economic conditions were the top issue influencing confidence, with 52.9 percent of respondents believing the economy would be weaker or significantly weaker over the next quarter.
“The Government should be concerned with this result because it directly affects forward development decision making, which will impact on jobs and investment that are desperately needed in Tasmania,” says Property Council of Australia Tasmanian Executive Director, Mary Massina.
“This is our second confidence survey and it is showing that Tasmania sits at 85 on the index, which represents a slide of three index points from the previous survey in September 2011.”
The next two identified issues of influence were the state and federal political environments, with the Tasmanian property industry expressing concern about both tiers of government, which was being reflected in their confidence levels and business decision making.
There has been no change in respondents’ view of the top three government impediments to business, with the planning system, development assessment decision-making and general business conditions continuing to act as clear barriers to further investment in Tasmania.
The property industry’s view of construction conditions over the next quarter are also subdued, with all sectors except retirement living currently stalled.
With an ageing demographic it is not surprising that the property industry anticipates that construction and capital values in the retirement living sector will increase.
Of concern however is the office market, with respondents expecting to see demand for office space fall in the next quarter, in line with State Government public service cuts.
ANZ Head of Property Research, Paul Braddick, says the decline in Tasmanian respondents’ confidence on the Survey follows a weakening of the Tasmanian economy through 2011.
“A subdued economic outlook for the Tasmanian economy for 2012 presents some medium-term downside risk to property prices, with the net balance of Property Industry Confidence Survey respondents reporting negative capital growth expectations across residential and all commercial property segments,” Mr Braddick says.
Ms Massina says the Survey also found the property sector had clear concerns regarding the State’s business tax regime, with 71.8 percent taking the view that current business taxes are high or too high.
This result is not surprising with property taxes making up 36.7 percent ($333 million) of the state’s total taxation revenue, and local government’s tax on property through rates and charges generating more than $500 million towards the coffers of 29 councils.
“It is hard to see where the State Government gets its confidence that the private sector is stepping into the space left by government, given the poor confidence levels of the private sector for the second quarter in a row,” Ms Massina says.
“We are at the start of 2012 and the rubber has to hit the road.”
“The Government needs to commit to fast-tracking key reforms such as local government, planning, and water and sewerage reform.”
“This Government must take a leadership role and make a reality of its comments that it is an ‘enabler’ of business, because at the moment its focuses on its own business rather than attacking the cost of living and costs of commerce, which together are creating an unhealthy investment environment.”
“It is not sufficient for Government to rest on the Economic Development Plan as the panacea for the private sector; we need real reforms and we need them now,” Ms Massina says.
Mary Massina – Property Council Tasmania Executive Director: 0408 594 312
Paul Braddick – ANZ Head of Property Research: 03 9273 5987