Join our daily newsletter At The Bell to receive exclusive market insights
- Confidence in the property industry has strengthened across the board, approaching new record highs as economic growth expectations spur confidence.
- The residential sector confidence is all at an all-time high, but the positivity isn’t shared across every sector of the property industry
- There are expectations that Australian house prices will increase over the next 12 months, with 87 per cent of firms operating in the residential sector expecting price gains
- ANZ believes that housing prices will rise around 17 per cent through 2021, helped by ultra-low mortgage rates which have trumped factors like low population growth and elevated unemployment
- Respondents from all states and territories tracked believed there will be an interest rate increase over the next 12 months
Confidence in the property industry has strengthened across the board, approaching new record highs as economic growth expectations spur confidence.
The ANZ/Property Council industry survey for the March quarter found that national industry confidence soared to 142 points, the second-highest level since the survey began.
This represents an 80-point improvement over the last twelve months when the pandemic first impacted confidence levels. A score of 100 is considered neutral.
The residential sector confidence is all an all-time high, but the positivity isn’t shared across every sector of the property industry.
Sentiment for Australian hotel capital growth expectations increased but remains in negative territory at -29 index points.
Retail and office capital growth is a similar story, while expectations have increased over the quarter confidence still sits at -14 and -13 index points, respectively.
Property Council of Australia Chief Executive Ken Morrison said rising confidence was being driven by record high economic growth expectations.
“When the property industry is confident it is exceptional news for the entire national economy because it employs so many people, more than 1.4 million Australians,” he said.
“While the economy still faces significant challenges, the property industry is clearly buoyed by the speed of our turnaround and the strong demand they are seeing, particularly in the residential and industrial sectors.”
“The survey also showed an easing of concerns about the office sector as more CBD workers return to their work places,” he continued.
“Government stimulus and business support measures have done their job in supporting our industry and the economy over the last twelve months.”
“With many stimulus measures having now run their course, it is critical that this confidence is backed up by policymakers through measures that will continue to help reactivate our CBDs and upscale our quarantining capacity,” Morrison concluded.
Residential sector leading the way
Capital growth expectations over the next 12 months for the housing and industrial sectors are now sitting at the highest levels ever recorded across all jurisdictions.
There are expectations that Australian house prices will increase over the next 12 months, with 87 per cent of firms operating in the residential sector expecting price gains.
In March, national house prices rose 2.8 per cent month on month, the strongest gain since the late 1980s.
ANZ believes that housing prices will rise around 17 per cent through 2021, helped by ultra-low mortgage rates which have trumped factors like low population growth and elevated unemployment
Respondents from all states and territories tracked believed there will be an interest rate increase over the next 12 months.
On the construction front, a net balance of 61 per cent expect construction to expand over the coming year, the highest since March 2015 and up from 45 per cent in the previous quarter.
Economic expectations positive
The survey found national economic growth expectations jumped significantly from 13 to 38 index points, the highest level ever recorded in the survey’s 10-year history.
Over the next three months, 64 per cent of respondents believe the impact of the coronavirus outbreak on their business will improve.
Western Australia hit its highest confidence level on record and was the most positive outlook in the country.
67 per cent of respondents believed the hotels, tourism and leisure sector will continue to be the most severely impacted by the Coronavirus outbreak over the next three months, followed by commercial office (17 per cent) and then shopping centres (11 per cent).
“Property sentiment has improved again, reflecting stellar economic performance, a large pipeline of work for the coming year and a strong outlook for property prices,” ANZ Senior Economist Felicity Emmett said.
“The combination of record-low mortgage interest rates and targeted stimulus is clearly supporting the housing sector, where confidence is now at record levels.”
“Price expectations are at all-time highs, while the HomeBuilder scheme, along with state and federal government initiatives, has brought forward a large chunk of demand. This has more than offset the impact from low population growth and elevated unemployment,” she continued.
“The impact of the pandemic continues to linger, though, and the outlook for the tourism sector remains clouded in an environment of repeated state border closures and delays to the vaccine rollout,” Emmett concluded.
There were 830 respondents to the online survey between March 15 and March 31, 2021. Most of the survey responses were collected before southeast Queensland’s recent lockdown.
