Sentiment within the property industry in Australia remains high amid a strengthening outlook in New South Wales, rising confidence surrounding the hotels and accommodation sector and positive expectations regarding forward work schedules and staffing levels.
Released last week, the September quarter Property Council of Australia/ANZ Property Industry Confidence survey showed the Property Industry Confidence Index at 121 – down from a record high of 124 in the June quarter but still firmly in positive territory and 15 points higher than at the same time last year. Any reading above 100 indicates net optimism regarding prospects over the next 12 months.
Property Council of Australia chief executive officer Peter Verwer says optimism being driven by improving conditions in New South Wales, which has joined Western Australia as a driver of growth in the economy.
“The strengthening confidence of the property sector in New South Wales is reflected in positive expectations about house price growth and significant cap rate compression for prime commercial assets,” he says. “NSW is also the most bullish about hiring more property industry professionals to service growing economic demand.”
Despite the optimism, Verwer says there are concerns in Victoria as slowing population growth and overbuilding in the residential sector underscore fears about recessionary conditions in that state.
More broadly, he says the industry is seeking further interest rate cuts and greater levels of political certainty following recent events in federal politics.
“There is no doubt the property industry is looking for an election as soon as possible to dispel the uncertainty that shrouds Australia’s political and investment landscape,” he says.
ANZ chief economist Warren Hogan says property values are being supported by increasing optimism regarding the economy as well as strong demand from offshore investment, albeit with declines in resource investment, a cautious household sector and ongoing fiscal consolidation presenting challenges to economic growth.
Key points of the survey are as follows:
- The Property Industry Confidence Index declined three points from 124 to 121 in the September quarter but is up 15 points compared with the same quarter in 2012
- Western Australia leads the way in terms of confidence followed by New South Wales and the Northern Territory, and confidence remains in positive territory for all states except Tasmania and the ACT
- Expectations regarding forward work schedules over the next 12 months remain high, while those regarding staffing levels and availability of finance remain modestly in positive territory; expectations regarding planned levels of construction surged over the past month
- Expectations remain positive for house price growth and capital growth for retirement living, accommodation and industrial property; moderate contractions in capital values are expected over the next twelve months in office and retail property
- Survey respondents remain modestly unhappy with government performance in planning and managing growth, with Tasmania the worst performing area in this regard