Thursday 15 December 2022
MEDIA RELEASE
MACRO PRESSURES WEIGH ON PROPERTY INDUSTRY CONFIDENCE, BUT SENTIMENT REMAINS IN POSITIVE TERRITORY
Macroeconomic factors have dampened confidence within Australia's property industry although sentiment remains in positive territory, according to the latest ANZ/Property Council survey.
The survey of Property Council members found the overall Confidence Index dropped 6 points nationally in the December quarter yet remained in positive territory (113 index points) but below the long-term average (123 index points). A score of 100 in the Confidence Index is considered neutral.
Property Council of Australia Chief Executive Ken Morrison said the industry remained broadly optimistic, despite trepidation in confidence driven by external factors.
"These results are not surprising, but they do show that higher interest rates and concerns about the economy are beginning to impact confidence in this industry which employs more than 1.4 million people," Mr Morrison said.
"While confidence remained firmly on the positive side of the ledger, this survey revealed forward workbooks are not as strong as in the previous quarters this year.
"Respondents in NSW and Victoria were significantly more pessimistic about the economy than those elsewhere," he said.
The survey of 747 respondents, conducted between 14-30 November 2022 showed forward work expectations remained positive in every state and territory over the quarter, with Western Australia (48.6) and the Australian Capital Territory (45.7) returning the strongest figures. The national average of 35.7 is just below the historical average of 36.7. A score of 0 is considered neutral.
Future staffing expectations remained positive (17.3), higher than the historical average (16.7), but fell in all markets except the ACT.
ANZ Senior Economist Felicity Emmett said sentiment is facing a trifecta of higher interest rates, rising costs and reduced access to finance.
"Firms remain more upbeat about their own prospects than the broader outlook, but their optimism is beginning to fade," Ms Emmett said.
"Sentiment around hiring intentions and the activity pipeline remain elevated but are trending lower.
"Higher interest rates and the prospect of further increases are taking their toll on property sentiment. Firms remain quite negative about the broader economic outlook, with rising costs and concerns about access to finance weighing on confidence," she said.
The survey found the COVID-19 pandemic is expected to cause the greatest impact to the commercial office sector, followed by the hotels, tourism and leisure sectors.
Respondents' economic growth expectations remain negative at both the national and state levels, falling to -27 and -10, respectively.
Mr Morrison said the survey results found housing supply and affordability have consolidated as the primary areas the industry want the federal and state governments to focus on.
"Housing supply and affordability remain front of mind for property participants, and hopefully for governments as well," Mr Morrison said.
"31 per cent of respondents saw housing supply and affordability as the most critical issue for the federal government while on a state level that increased to 39 per cent," he said.
