Property industry resilient as sector earmarks expansion

14 April 2022

Confidence in Australia’s property sector has remained at historically elevated levels despite a less positive outlook on the economy, according to ANZ/Property Council’s latest industry survey.

The Confidence Index dropped 5 points nationally in the March quarter but remained in positive territory (137), buoyed by optimism about the economic outlook. A score of 100 in the Confidence Index is considered neutral.

Despite the small decline in confidence, Property Council of Australia Chief Executive, Ken Morrison, said stronger levels of confidence throughout the industry are positive for the overall economy.

“The industry’s forward work expectations have continued to lift this quarter and so have their staffing level expectations,” Mr Morrison said.

“This means that the property sector – which employs more Australians than any other sector – is set to hire more people and deliver more work, something both sides of politics should welcome as we begin the federal election campaign.

“Given the extent of turbulence the sector has suffered over the previous quarter this is a resilient outcome that stays above the historic average.”

The survey, taken between March 15 and 30, showed future work expectations lifted in every State and Territory bar ACT over the quarter, with the biggest jumps recorded in SA (40 to 48 index points) and WA (45 to 53 index points). Job creation expectations also increased substantially in QLD (20 to 32), Victoria (19 to 35) and SA (30 to 42). A score of 0 is considered neutral.

Over 60 per cent of respondents nationally believed that the effects of the pandemic will lessen over the next three months.

Victorian respondents are still the likeliest to think the pandemic would impact their business operations but are the most optimistic about conditions improving over the next three months and the least pessimistic about the availability of debt finance.

Property Council Victorian Executive Director Danni Hunter said: “Despite the challenges of high COVID-19 cases at the start of this year and a delayed return to the office, the Victorian property industry has remained resilient throughout.

“Last week’s office occupancy figures showing Melbourne jumping to 32 per cent is a key indicator of confidence continuing to return to the office, and this survey shows the signs are positive that confidence will persist.

With the election only a few weeks away, survey respondents identified some of the most pressing concerns confronting the federal government.

“Housing supply and affordability topped the list of major issues to be addressed by a federal government over the next 12 months, with its strongest response in the history of the survey,” Mr Morrison said.

“Research from the Property Council of Australia recently revealed almost 70 per cent of voters fear younger people will never be able to buy a home in this country, with 90 per cent of those trying to enter the market indicating it was the most important issue in deciding their vote in the May federal election.

“Also on the agenda for our members is ESG, with cities and infrastructure delivery, alongside economic management, remaining key issues.”

ANZ Senior Economist Felicity Emmett said commercial property confidence climbed in the quarter, buoyed by improving sentiment in the industrial, retail, and tourist sectors, while residential property confidence fell somewhat but remains stronger than it was pre-Covid.

“Industrial property sentiment continues to power ahead, with the strong construction outlook backed up by the sharp lift in building approvals over the last few years,” she said.

“The opening of the international borders has buoyed tourism sentiment, lifting it to its highest level since 2018.

“While retail and office property sentiment remain in positive territory, they face headwinds, particularly office property, where sentiment declined in the March survey.”