Confidence throughout the property sector in Australia has plummeted thanks to uncertain economic outlook, a survey involving more than 1,000 property developers, real-estate managers and agents has found.
Conducted by the Property Council of Australia and ANZ, the Property Industry Confidence Survey measures confidence levels regarding twelve-month prospects across a range of areas win commercial and residential real-estate.
Overall, it shows that confidence within the sector fell 10 points from 128 in the September quarter to 118 in the December quarter.
At these levels, confidence remains above the 100 level separating net optimism from net pessimism but is below the 126 average observed across the eight years of quarterly surveys which began in 2011.
In the latest survey, confidence improved in regard to house price expectations but declined in respect to forward work schedules, staffing levels, economic growth and capital growth in respect of offices, industrial property, retail property, retirement accommodation and hotels.
Confidence has been particularly hard-hit in South Australia, where the property sector has raised opposition to changes in respect of land tax.
Confidence in South Australia plummeted from 144 points in the September quarter to just 101 points in the December quarter – seeing that state go from the highest levels of confidence in the country to the lowest.
The fall in confidence comes amid challenges in the broader economy which include the US/China trade war, sluggish wage growth, weak retail conditions and slowing activity in new home building.
All this has seen the economy grow by only 1.4 percent over the past twelve months and contract by 0.2 percent on a per-person basis.
As well, the sector faces political battles over land tax changes across several states.
In South Australia, the Government is proposing to remove the ability of property owners to split ownership of their properties across multiple businesses and trusts in order to pay lower land tax rates on individual properties.
Whilst the government views the move as creating greater equity in the land tax system, the Property Council argues that the changes will mean higher tax bills for property owners and investors.
In Queensland, the Government in the most recent state budget increased land taxes on properties valued at above $5 million and applied a two percent ‘absentee owners’ land tax surcharge of two percent in respect of properties valued at $349,999 or more.
Property Council of Australia Chief Executive Officer Ken Morrison says confidence within the industry was being impacted by subdued economic conditions.
Morrison called on state and federal governments to adopt policy measures which help to promote confidence in the sector, which accounts for around thirteen percent of gross domestic product and employs roughly one in ten Australians.
“Growing concerns about national economic growth are weighing on sentiment in the property industry, with a sharp drop in sentiment over the last quarter …” Morrison said.
“… When federal, state and territory treasurers meet next week, they should put reforms which will stimulate investment in the property sector at the top of their list, both to boost economic activity as well as ensure there is a strong and stable supply of housing over coming months and years.
ANZ Senior Economist, Felicity Emmett said the survey showed a mixed picture with an improving outlook in housing but a trend toward lower confidence in the commercial sector amid struggling retail conditions and uncertainty over land tax reform in South Australia.