Confidence within Australia’s property sector has lifted amid a recovery in the housing market, the latest survey measuring expectations about property industry conditions over the next twelve months indicates.
Releasing its Property Industry Confidence Survey undertaken in conjunction with ANZ, the Property Council of Australia says its Property Industry Confidence Index lifted by five points from 118 in the December quarter to 123 in the March quarter.
Whilst current readings are below the historical average of 126, the index remains above the 100.0 mark which separates net optimism from net pessimism.
The result was driven by the turnaround in housing market conditions, which have seen average dwelling prices rise by 4.4 percent over the December quarter alone (CoreLogic data).
Expectations about house price capital growth have shifted from around negative 30 twelve months ago to more than positive 30 in the latest survey.
Survey respondents were also optimistic about expectations for forward work schedules, staffing levels, debt finance availability and capital growth in office, industrial and retirement living property.
Respondents were pessimistic, however, about expectations for the national economy as well as for capital growth in retail property.
Property Council of Australia chief executive officer Ken Morrison welcomed the results.
Nevertheless, he cautioned that the strengthening housing market underscored the need for policy action to address long-term affordability issues.
“Strong house prices help underpin confidence and activity, but without matching housing supply, this can lead to runaway price increases and real housing affordability pressure,” Morrison said.
“Coming off the back of a sustained drop in new housing approvals and construction starts, we must be vigilant to ensure housing supply keeps up with demand, including population growth, as the residential market reboots.
“Governments must be on the front foot in keeping the housing supply lines open and support affordability through better planning and infrastructure delivery.
“It will be important for all levels of government to keep their focus on these challenges in the months ahead, on top of the huge job of helping our bushfire-affected communities recover and rebuild.”
ANZ Senior Economist Felicity Emmett said the survey results were the latest indication that the improvement in residential housing conditions will continue, albeit with the level of price gains set to moderate this year as new supply comes online.
Emmett says the continued improvement in credit availability should also lead to an increase in residential construction over coming months.
She also welcomed a lift in commercial property sentiment – a phenomenon she says indicates that recent weakness in non-residential building approvals may be short-lived.
Based on responses from 926 respondents, the survey measures expectations about likely conditions within the property market over the next twelve months.
Respondents property developers, managers, agents and service providers.