[29 September 2022]
Confidence within Australia’s property industry has held firm in the face of uncertainty around macroeconomic conditions, with firms remaining confident in their own work schedule and staffing levels, according to the latest ANZ/Property Council survey.
The latest survey of Property Council members found the overall Confidence Index increased by 1 point nationally in the September quarter, remaining in positive territory (119 index points) and slightly below the long-term average (123.7 index points). A score of 100 in the Confidence Index is considered neutral.
Property Council of Australia Chief Executive Ken Morrison said the results reveal companies have confidence in their own operations, but external factors such as interest rates and construction costs are weighing on sentiment.
“Confidence in the property industry is torn between the largely positive indicators within their own businesses and the swift moving uncertainties in the macroeconomic environment,” Mr Morrison said.
“On the one hand, work pipelines and employment expectations look strong, while on the other hand interest rates, inflation, construction costs, skill shortages and recessionary fears in Europe and the US give real cause for concern.
“While property industry confidence went up slightly, it masks these strong forces pulling sentiment in opposite directions,” he said.
The survey of almost 750 respondents, conducted between August 29 and September 13 this year, found that confidence levels in the states and territories remain high, with sentiment in the ACT (135), WA (131), and NSW (121) higher than the national average.
Meanwhile, SA (115), Victoria (115) and QLD (113) all remained in positive territory. Over the quarter, future staffing level projections were strong in all states and territories, with the national average sitting at 22, significantly above the historical average of 16.6. A score of 0 is regarded as neutral.
Future work expectations also remained in positive territory but saw declines in every market aside from NSW and the ACT. T
he national index, sitting at 37, is slightly above the historical average of 36.8. COVID’s effects also linger, with respondents in most states expecting the pandemic to worsen business conditions.
The virus is expected to have the greatest impact on the commercial office sector according to the survey, followed by the hotel, tourism, and leisure sectors.
Respondents also anticipate a decline in home prices, with WA the only state to forecast positive price growth over the next 12 months.
“The office market is still feeling the impacts of recent Omicron waves, with our most recent Office Occupancy Survey showing the number of people in the office is holding firm, but still well below pre-Covid levels,” Mr Morrison said.
“Consistent with previous surveys, housing supply and affordability remains the most pressing critical issue for governments to address at both the federal and state levels,” he said.
ANZ Senior Economist Felicity Emmett said 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, but are still relatively upbeat about their own prospects,” Ms Emmett said.
“Rate hikes, both actual and prospective, access to finance, and rapidly rising costs are all headwinds for sentiment.
“Firms’ expectations of economic growth picked up a little in the September survey but remain well below the long-run average. Sharply rising inflation, a steep interest rate cycle and a deteriorating global backdrop are all weighing on the economic outlook,” she said.
The property industry accounts for 13 per cent of Australia’s GDP – the largest of any sector – and employs over 1.4 million Australians.
