NSW property confidence slips as cost pressures persist
NSW property industry confidence fell sharply this quarter, dropping below neutral (100) as cost pressures, weak economic expectations and tighter finance conditions weigh on project delivery.
The latest Procore/Property Council Industry Sentiment Survey shows NSW confidence falling to 89 index points, down from 109 last quarter and below the national result of 92.
Property Council NSW Executive Director Katie Stevenson said the June results show a clear shift in sentiment as conditions on the ground become more challenging.
"NSW confidence has moved from positive territory to below neutral in a single quarter. That's a significant change and it reflects how quickly conditions can tighten when cost pressures and financing constraints persist," Ms Stevenson said.
"The survey was conducted between 1 and 17 June, ahead of the NSW Budget. It captures a period where businesses were already grappling with persistent cost pressures, elevated interest rate expectations and tightening finance conditions," she said.
Ms Stevenson said that with the national result of 92, NSW's drop to 89 highlights the extent to which local conditions are now underperforming the broader market.
Queensland and South Australia remained clear outperformers at 120, alongside Western Australia (at 112), while Victoria is materially weaker at around 67. NSW's 20-point quarterly fall was the steepest decline recorded among the jurisdictions surveyed.
"Confidence has softened nationally but the sharper drop in NSW suggests cost pressures, financing constraints and project feasibility challenges are being felt more acutely here in the state's largest development market.
"NSW businesses are reporting a steeper pullback in work pipelines, staffing expectations and investment outlook than their national peers – these NSW results reinforce the need for more targeted policy settings that directly address feasibility and help unlock stalled projects," she said.
The June 2026 survey for NSW shows:
- Confidence falling from 109 to 89 index points, moving below neutral.
- Staffing expectations weakening, signalling a more cautious outlook from businesses.
- Forward work schedule expectations declining, pointing to softer pipelines and delayed investment decisions.
- State and national economic growth expectations remaining negative, reinforcing a subdued outlook.
- Interest rate expectations remaining elevated, with all markets expecting rates to rise.
- Debt finance availability expected to worsen, continuing to constrain delivery and investment.
Capital growth expectations have also softened across most sectors, with residential expectations falling in every market and weaker outlooks across office, retail and hotels.
Ms Stevenson said the results underline the central role of feasibility in unlocking supply.
"These numbers tell a consistent story – demand is still there, but the conditions required to turn that demand into delivery remain under pressure.
"Higher costs, tighter finance and a weaker economic outlook are all feeding directly into whether projects proceed."
Ms Stevenson said that while last week's 2026-27 NSW Budget delivered welcome certainty and some targeted wins for the property sector, including measures to support financing and attract investment into the build to rent and retirement living sectors, it was unlikely to shift sentiment in the near term.
"The Government has made a deliberate choice to prioritise fiscal discipline and avoid adding to inflationary pressures, reinforcing the cautious economic environment businesses are already navigating.
'Without deeper reforms to address feasibility, costs and project economics, confidence is likely to remain subdued despite the positive direction of travel on key reforms," she said.
Ms Stevenson said the commencement of the Development Coordination Authority from 1 July would be an important next step in improving project delivery, but its impact would depend on how effectively it addresses feasibility barriers on the ground.
"Streamlining coordination is a positive step, but unless cost pressures and financing constraints are also addressed, it won't be enough on its own to shift sentiment in the near term," she said.
Ms Stevenson said continued engagement between industry and government will be critical to improving conditions and to give NSW a fighting chance to deliver on its National Housing Accord commitment.
"We are continuing to engage constructively with government and appreciate the ongoing focus on creating a more efficient and effective planning system.
"This week marks the two-year milestone into the National Housing Accord and NSW is not yet building or approving homes at the pace required to meet its target. The state needs to roughly double its quarterly completion rate, which is why feasibility, planning coordination and cost pressures matter so much.
"The priority now is ensuring policy settings keep pace with changing market conditions – maintaining open dialogue, keeping options on the table and focusing on the costs that are within government control.
"For confidence to stabilise and lift, we need to see feasibility improve. That's the link between sentiment, investment and ultimately housing and job delivery."
