Confidence in the property sector throughout Australia has lifted slightly as stimulus measures such as HomeBuilder help to boost industry sentiment, according to an online survey of 857 respondents which pre-dates the Commonwealth Budget.

The ANZ/Property Council Survey national confidence score for the December 2020 quarter increased by 6 index points from 76 in the September quarter to 82 in the December quarter.

At this level, however, expectations were still well below the neutral score of 100 and the survey historical average of 123.

Expectations lifted but remained in negative territory for national economic growth, state economic growth, forward work schedules, staffing levels and most categories of commercial property over the next twelve months.

Property Council of Australia chief executive, Ken Morrison, said stimulus measures such as HomeBuilder are providing a much-needed boost for the industry.

But he cautioned of difficulty in maintaining this momentum after the current HomeBuilder scheme ends in December as the sector will be impacted by a decline in population growth amid the closed borders and the winding back of JobKeeper/JobSeeker payments.

He said governments of all levels will need to offer incentives to help stimulate the economy.

“As the scheme has become available in all states and territories, we have seen a big lift in sentiment among those in residential development.

“HomeBuilder is the pop star of government stimulus measures released so far – highly effective, immediate and good value for money.

“The challenge will be maintaining this momentum beyond December when the current scheme expires and we are looking at a huge drop in population growth due to closed borders.”

Key findings

• National confidencelevels increased by 6 index points to 82 for the December 2020 quarter – still well below the historical survey average of 123
• National forward work expectations are negative for the third consecutive quarter, although improved slightly to -5 from -8 for the previous quarter.
• National staffing level expectations are negative for the third consecutive quarter, although improved slightly to -5.
• National economic growth expectations are at -52 index points, the third-lowest level in the history of the survey, and negative for the fifth consecutive quarter.
• 51 per cent of respondents believe the future impact of COVID-19on their business will improve over the next three months, 31 per cent believe there will be no change, and 18 per cent believe impacts will get worse. Sentiment is most positive in South Australia, and most negative in Victoria and the ACT.
• 58 per cent of respondents believe Hotels, Tourism and Leisuresector will be most severely impacted by COVID-19, followed by shopping centres (18 per cent) and commercial office (16 per cent).
• 47 per cent of survey respondents have accessed the Federal Government’s JobKeeper program. 29 per cent will continue to access the program from the end of September.
• Expectations for another cut to interest ratesin the next 12 months have moderated slightly, while debt finance availability is expected to continue to be difficult to obtain. (Note: the Federal Treasurer’s announcement of changes to responsible lending obligations was made following the end of the survey period.)
• House capital growthexpectations remain negative with sentiment most negative in Victoria and NSW. WA, SA and the ACT recorded slightly positive expectations.
• Office capital growthexpectations continue to be negative at a near-record low of -63 index points
• Retail capital growthexpectations remain negative, for the tenth consecutive quarter at -63 index points
• Industrial capital growthexpectations are positive, up by 12 index points for the quarter – the only non-residential sector to record positive sentiment for the December 2020 quarter.
• National retirement living capital growthexpectations fell to -10 index points.
• Hotel capital growthexpectations remain strongly negative at -69 index points.
• The outlook for new retail, office and hotel constructionis negative while industrial (34 index points) and residential construction (9 index points) improved this quarter.
• 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 fell by 17 to 31 index points.
• The WA, SA and NSW state governmentsall recorded positive sentiment, with the ACT, Queensland and Victorian governments recording negative sentiment on their performance.