Confidence in Australia’s property sector remains subdued as the impact of COVID-19 continues to weigh on the sector, the latest report suggests.
Releasing the results of its latest Property Industry Confidence Survey conducted in conjunction with ANZ, the Property Council of Australia said its Property Industry Confidence Index fell rose by 14 points in the September quarter to go from 62 to 76.
At this level, however, sentiment remains well below the 100.0 level which separates positive sentiment from negative sentiment.
The survey showed that COVID was substantial.
Out of a possible score of between 200 and negative 200, survey participants put the overall impact of COVID on their business at negative 80 – although 60 percent believe that the virus’s impact on their business will lessen over the next three months.
Two-thirds of those surveyed believed the hotels sector will be the worst impacted of all sectors from the virus.
Moreover, 45 percent of all businesses within the property sector have accessed the JobKeeper program, whilst 55 percent believe the government should maintain the program beyond September 30.
Meanwhile, almost 70 percent of developers who operate in residential building believed that the HomeBuilder Grant would have a positive impact upon their business.
Property Council of Australia chief executive officer Ken Morrison stressed that the survey results were taken before the six week lockdown of Melbourne.
“These results show the property industry – employing more than 1.4 million Australians – remains on coronavirus-induced confidence rollercoaster,” Morrison said.
“While there has been some improvement in sentiment where transmission is low and a positive response to the HomeBuilder stimulus, confidence in the economy remains low and the Victorian outbreak will have dealt further blows to this.
There were 955 respondents to the online survey between 15 June and 1 July.
According to the survey:
- National confidencelevels increased by 14 index points to 76 for the September 2020 quarter – still in negative territory and well below the historical survey average of 126.
- National forward work expectations are negative for the second consecutive quarter, although increased from -22 to -8 for the September 2020 quarter.
- National staffing levelexpectations are negative for the second consecutive quarter, although increased by 7 index points to -9.
- National economic growthexpectations are at -67 index points, the second-lowest level in the history of the survey, and negative for the fourth consecutive quarter.
- The current impact of COVID-19is more severe than the previous quarter in all markets, except for the ACT.
- 60 per cent of respondents believe the future impact of COVID-19on their business will improve over the next three months, 24 per cent believe there will be no change, and 16 per cent believe impacts will get worse.
- 66 per cent of respondents believe Hotels, Tourism and Leisuresector will be most severely impacted by COVID-19, followed by shopping centres (15 per cent) and commercial office (13 per cent).
- 45 per cent of survey respondents have accessed the Federal Government’s JobKeeper program, while 55 per cent believe it should be extended beyond September.
- Expectations for another cut to interest ratesin the next 12 months have moderated, while debt finance availability is expected to continue to be difficult to obtain.
- House capital growthexpectations have declined for a second consecutive quarter, with the biggest drops in sentiment in NSW and Victoria
- Office capital growthexpectations have dropped to a record low of -66 index points
- Retail capital growthexpectations remain negative, for the ninth consecutive quarter at -64 index points
- Industrial capital growthexpectations are neutral overall, although slightly positive in NSW and Victoria. This is the only asset type to record neutral or positive capital growth indications since the onset of COVID-19
- National retirement living capital growthexpectations rose by 11 index points to -6 index points.
- Hotel capital growthexpectations remain strongly negative at -73 index points.
- The outlook for new retail, office and hotel constructionis negative.
- Prime and secondary cap ratesare expected to ease across all markets over the next 12 months (with the exception of ACT prime cap rates).
- Confidence in the Federal Government’s performancein delivering policies that encourage jobs and economic growth is at a record high, while all state and territory governments except for Queensland also recorded positive sentiment.