A confident start to 2017

Led by a dramatic increase in confidence levels in NSW, confidence in the property sector nationwide is at a two year high according to the latest quarterly ANZ Property Council Survey.

The sentiment survey of more than 1,500 people across the property industry – the largest of its kind – found an increase in confidence over the quarter, from 130 to 132 points. A score of 100 is considered neutral.

Property Council chief executive Ken Morrison says the survey is good news to start 2017.

“The data says that the industry is optimistic about the coming quarter. We see good expectations in terms of economic growth, capital values and forward work schedules. Naturally there are state by state variations, but taken together this is good news during a somewhat uncertain time”, Morrison says.

According to Richard Yetsenga, ANZ’s chief economist, the March quarter survey showed that firms are considerably more 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.”

The strongest result for confidence was in NSW which rose from 142 to 149 points. South Australia posted a 2 point increase (from 128 to 130) and Queensland a 3 point increase (from 120 to 123). Victoria and the ACT held steady at 139 and 142 respectively. Western Australia moved back into negative territory falling 6 points from 104 to 98.

Jane Fitzgerald, the Property Council’s executive director for NSW argues that the good results simply meant that the state must continue to drive economic reform.

“The government is moving full steam ahead with asset recycling and council amalgamations and the survey finds high levels of confidence in the government’s economic agenda. However, we have to resist the temptation for NSW to rest on its laurels. In 2017, we need to see real planning reform in NSW as well as taxation reform.

Sally Capp, the Victorian executive director says that while confidence is steady in the state there are concerns about declining credit access and rising taxes. The survey found a slight decline in the state’s economic growth expectations as well as forward work schedule expectations.

“Tightening credit conditions are causing angst in an industry already grappling with spikes in land tax, rates, stamp duty and the fire services property levy,” Capp says.

The disappointing results in Western Australia according to Lino Iacomella reflect the “long hard slog back after the end of the mining construction boom”.

With a state election due in March, Iacomella has called on both sides of politics to focus on policies that will allow the industry to once again “become the growth engine of the state”.

In Queensland, the turnaround in confidence has been welcomed, but executive director Chris Mountford warns that confidence levels still lag that of other states.

“The property industry is one of the few areas of the Queensland economy that is currently creating jobs and it is imperative that 2017 is a year of action from the state government to attract investment for job-creating projects.

In South Australia, the industry has experienced a 2 point lift in confidence over the quarter and a 11 point lift since March 2016.

“The latest dataset reveals some good signs and some bad signs. The forward work expectations are down on the last three quarters but they are still stronger than any recorded figure between 2012 and 2015”, says SA executive director Daniel Gannon.

Gannon says the industry is putting before the government a five pillar plan to drive investment which includes stamp duty and land tax reform, local government amalgamations, energy infrastructure resilience and tackling regulatory blockages.

The ACT continues to have strong sentiment and has experienced an 11 point lift in confidence over a year. ACT executive director Adina Cirson says it is a very positive time in the capital with forward work schedule expectations currently the highest in Australia.

“The ACT is punching above its weight as the smallest jurisdiction, and it is great to see that the property sector is really holding its own”, says Cirson.

Source: Property Council of Australia