A survey of industry participants shows confidence in the property sector is at a two-year high, despite the prospect of higher interest rates and the slowing trend in building approvals.
Confidence in the property sector is at a two-year high at the beginning of 2017, according to the latest ANZ Property Council Survey.
The survey of more than 1,500 property professionals showed that confidence rose 2 points to 132 for the March 2017 quarter. A score of 100 is considered to be neutral confidence.
“This is good news to start 2017,” said Ken Morrison, Chief Executive of the Property Council of Australia.
Despite the prospect of higher interest rates and the recorded slowdown in building approvals, Morrison said the outlook is optimistic for “economic growth, capital values, and forward work schedules.”
However, Morrison recognised that the situation varies across the country.
“Naturally there are state by state variations,” he said, “but taken together this is good news during a somewhat uncertain time.”
NSW’s reading jumped from 142 to 149, the highest result in the country.
“We see in NSW a strong surge in confidence underpinned by expectations for economic growth, housing, forward work expectations as well as confidence in the government itself,” said Morrison.
“Likewise, we are seeing consistent and strong growth expectations in Victoria and the ACT. We are also seeing a pickup in confidence in South Australia and Queensland.”
Morrison said Western Australia remains a weak spot. The confidence index showed a decline from 104 to 98.
“Western Australia is still coming to terms with the end of the mining moon,” he said, “and confidence did slip back into negative territory.”
Morrison said it’s important that governments do all they can to facilitate growth in the uncertain economic climate.
“Given the trifecta of deficits, ratings agency reviews and negative growth data from the ABS, it is vital that industries that are growing be encouraged to flourish,” said Morrison.
“Tackling our byzantine planning systems, cutting unnecessary delays costs Federal and State budgets nothing,” he said, will “spur investment, jobs and growth.”
Richard Yetsenga, ANZ Chief Economist said the March quarter survey showed that firms are optimistic around the outlook for the property sector.
“Much of the improved outlook for the property market came from the residential segment, supported by improved expectations of capital price growth, forward work schedules and construction activity,” he said.
Yetsenga said strong levels of property investment were also buoying the sector, and the commercial sector was doing well.
“Sentiment in the commercial property segment is still stronger than in residential property,” he said.
“Net confidence in the commercial offices segment has been steadily rising for two years now, reflecting an improving outlook for price growth and construction activity. The result is in line with ongoing absorption of office space, as white-collar employment continues to rise across the major capital markets.”