COVID-19 is keeping property industry confidence at a near-record low level despite an improvement in sentiment for the September 2020 quarter.
The ANZ/Property Council survey national confidence score for the September 2020 quarter was 76, well below a neutral score of 100. The September quarter results represent a 14 point improvement on the record low experienced in the previous quarter.
Expectations around forward work schedules and staffing levels remain negative and the current impacts of COVID-19 remained strongly negative.
More than 60 per cent of residential sector firms reported the Federal Government's HomeBuilder scheme had had a positive impact on their business.
Property Council of Australia chief executive, Ken Morrison, cautioned that while sentiment had shown some signs of improvement in this survey, this was before the six-week lockdown was announced for greater Melbourne.
"These results show the property industry - employing more than 1.4 million Australians - remains on coronavirus-induced confidence rollercoaster," Mr Morrison said.
"While there has been some improvement in sentiment where transmission is low and a positive response to the HomeBuilder stimulus, confidence in the economy remains low and the Victorian outbreak will have dealt further blows to this.
"Victoria's economy accounts more than one-fifth of GDP and 40 per cent of economic growth last year and was our fastest growing city in population terms.
"The consequences for national industry and business confidence from the Victorian lockdown are likely to be significant for the coming quarter and beyond," Mr Morrison said.
"The outlook for construction in key sectors such as retail, office and hotels is tracking downward.
"As in the first phase of lockdowns, it will be critical to keep construction going to support jobs and the economy as much as possible.
"While Australia has made better than expected progress in suppressing COVID-19, as shown by the lift in sentiment in those states and territories which have been able to ease restrictions, the risk of new outbreaks and the economic consequences of shutting down the economy will be continue to be felt for some time.
"Decisions on the future of JobKeeper along with other business support and economic stimulus measures will be critical in rebuilding industry confidence and activity levels over coming months," Mr Morrison said.
The biggest shift in sentiment was in those states and territories with none or fewer new cases of COVID-19 which has led to the easing of restrictions, including South Australia, Western Australia and the ACT.
Survey respondents said the current impact of COVID-19 on business was more severe than the previous quarter. However, 60 per cent of those surveyed expected conditions to improve over the next three months, 24 per cent expected no change, and 16 per cent expected the impact of COVID-19 to worsen.
45 per cent of survey respondents said their business had accessed the Federal Government's JobKeeper program. 55 per cent of survey respondents said JobKeeper should continue beyond its currently planned cut-off date in September.
There were 955 respondents to the online survey between 15 June and 1 July.
Key findings
- National confidence levels increased by 14 index points to 76 for the September 2020 quarter - still in negative territory and well below the historical survey average of 126.
- National forward work expectations are negative for the second consecutive quarter, although increased from -22 to -8 for the September 2020 quarter.
- National staffing level expectations are negative for the second consecutive quarter, although increased by 7 index points to -9.
- National economic growth expectations are at -67 index points, the second-lowest level in the history of the survey, and negative for the fourth consecutive quarter.
- The current impact of COVID-19 is more severe than the previous quarter in all markets, except for the ACT.
- 60 per cent of respondents believe the future impact of COVID-19 on their business will improve over the next three months, 24 per cent believe there will be no change, and 16 per cent believe impacts will get worse.
- 66 per cent of respondents believe Hotels, Tourism and Leisure sector will be most severely impacted by COVID-19, followed by shopping centres (15 per cent) and commercial office (13 per cent).
- 45 per cent of survey respondents have accessed the Federal Government's JobKeeper program, while 55 per cent believe it should be extended beyond September.
- Expectations for another cut to interest rates in the next 12 months have moderated, while debt finance availability is expected to continue to be difficult to obtain.
- House capital growth expectations have declined for a second consecutive quarter, with the biggest drops in sentiment in NSW and Victoria
- Office capital growth expectations have dropped to a record low of -66 index points
- Retail capital growth expectations remain negative, for the ninth consecutive quarter at -64 index points
- Industrial capital growth expectations are neutral overall, although slightly positive in NSW and Victoria. This is the only asset type to record neutral or positive capital growth indications since the onset of COVID-19
- National retirement living capital growth expectations rose by 11 index points to -6 index points.
- Hotel capital growth expectations remain strongly negative at -73 index points.
- The outlook for new retail, office and hotel construction is negative.
- Prime and secondary cap rates are expected to ease across all markets over the next 12 months (with the exception of ACT prime cap rates).
- Confidence in the Federal Government's performance in delivering policies that encourage jobs and economic growth is at a record high, while all state and territory governments except for Queensland also recorded positive sentiment.
To view select ANZ/Property Council Survey historical data series, visit the Property Council's Data Room
