Property industry sentiment across Australia has fallen for the second consecutive quarter with drops in expectations across a number of key indicators including forward work and staffing levels.
“This report shows that sentiment – while still positive – is softening in critical areas across an industry that is Australia’s biggest employer and supports 1.4 million jobs,” said Ken Morrison, Chief Executive of the Property Council of Australia.
“This shift in sentiment needs to be on the radar of policy makers because now more than ever we need strong investment, tax and planning regimes to keep the economy strong.”
ANZ Head of Australian Economics, David Plank commented: “The ANZ-Property Council Survey for the December 2018 quarter gives a pretty soft read on Australia’s property sector. The downturn in the housing outlook is significant, although not surprising. But the second consecutive fall in the commercial property space is something we will be watching. While confidence in commercial property is still elevated, a downturn from here would be disappointing and potentially pose a challenge to our outlook for non-mining business investment.”
The ANZ/Property Council Survey for the December 2018 quarter shows a 12 index point decline in national industry confidence to 126 points. While sentiment is still in the positive range (a score of 100 is considered neutral), the index has been falling since earlier this year, from 143 in the June 2018 quarter and 138 for the September 2018 quarter.
The result is 15 index points lower than the same time in 2017, and the lowest level since September 2013. For the first time in four years, all of the markets tracked recorded a quarterly decrease for the quarter, with Victoria and NSW recording their largest quarterly decreases since the Survey’s inception in December 2011.
Overall sentiment remains strongest in South Australia at 144 index points, followed by the ACT and WA. The largest drops in confidence were recorded in Victoria (-15), New South Wales (-14) and Queensland (-12).
The Survey found that forward work schedules and staffing level expectations have both fallen in parallel for the first time, with a 6 index point drop for both indicators. Staffing expectations recorded their largest quarterly drop since the Survey’s inception.
The forward work schedule measure is at its lowest level since September 2016, while the quarterly staffing expectation measure has dropped to its lowest level since September 2014. Expectations for construction activity fell in all sectors for the December 2018 quarter, with residential construction dropping into negative territory for the first time in seven years.
Expectations around national economic growth have fallen into negative territory for the first time in three years, dropping by 12 index points to –3.
The survey was conducted prior to the release of the interim report of the financial services Royal Commission at the end of September 2018 but shows a further decline in expectations around debt finance availability to a record low level.
The outlook across most commercial property sectors continues to be broadly positive although capital growth expectations across offices, industrial, hotels and retirement living all declined for the quarter.
The ANZ/Property Council survey is based on responses from more than 900 property industry participants. The survey was conducted between 3-19 September 2018.
Source: Property Council of Australia