The September quarter Procore / Property Council Industry Survey found national sentiment fell to 85 index points, while the industry's confidence in the Federal Government's performance dropped to its lowest level on record.
Property Council Chief Executive Mike Zorbas said the survey painted a grim picture of an industry genuinely vexed by the impact of tax changes on investment, projects and jobs.
"For the first time, tax reform has become the most critical issue industry wants addressed by the Federal Government.
"Ahead of a possible interest rate rise next week, this curdling of sentiment should set alarm bells ringing in Canberra. It goes to the heartfelt impact of tax hikes including the impending uncertainty of rushed trust tax hikes.
"At the State level, 42 per cent of people nominated property taxes and charges as the critical issue for government attention, the highest result ever recorded.
"Governments have engineered a situation where taxes are becoming a bigger concern than new project supply itself. In the case of housing, up to forty per cent of the cost of a new home is government taxes and charges.
"If the Federal Parliament needs another warning sign, house price growth expectations are at record lows nationally and in Victoria, Queensland and the ACT.
"Earlier this week, our research with industry partners found more than 60 per cent of small and medium property developers expect the Government's proposed trust tax changes to affect the timing or viability of projects. Those concerns are now showing up in broader sentiment.
"The proposed trust tax lands on many of the family-owned and mid-tier businesses doing the hard yards of development. These businesses fund infrastructure, employ Australians and deliver the homes, warehouses and communities our economy depends on.
"Between Federal, State and local governments we are on a tax escalator to nowhere - damaging property investment of all kinds at a time of rising capital, materials and labour costs. No wonder project feasibilities are challenged.
"The industry is saying to government - we support the housing targets, now stop making them harder to achieve."
Other key findings
- All markets except Victoria and Queensland recorded sentiment at a five-year low.
- Expectations for national economic growth were at their lowest level on record outside the COVID-19 shock of March and June 2020.
- Every market recorded negative sentiment towards debt finance availability, with New South Wales recording its lowest result on record.
- All markets recorded a decline in house price growth expectations.
- Every market expects negative office capital growth over the next year.
- Property taxes and charges were nominated by 42 per cent of respondents as the most critical issue for state governments to address, the highest result ever recorded.
