According to the ANZ-Property Council Survey for the December 2017 quarter, sentiment in Australia’s property sector has fallen sharply to its lowest level in two years. The decline was recorded across all states and territories, although New South Wales and Victoria are bearing the brunt of weaker confidence.
Ken Morrison, Chief Executive of the Property Council of Australia said the 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.
“This shift in sentiment needs to be on the radar of policymakers because now more than ever we need strong investment, tax and planning regimes to keep the economy strong,” Mr Morrison commented.
ANZ Head of Australian Economics, David Plank said the survey 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,” he said.
The survey highlighted 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 last year, and the lowest level since September 2013.
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 also 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 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.
Further information on the ANZ-Property Council Survey (December quarter) can be found here.