For all the doom and gloom heard recently about the outlook for Australia’s property market, it doesn’t seem have dented confidence for those who work within the industry.
Indeed, rather than dragging on confidence, sentiment has actually improved, and sharply, according to the latest ANZ-Australian Property Council Survey released this morning.
According to the report, confidence levels jumped to the highest level in close to four years in the December quarter, driven by broad-based improvements in every Australian state and territory.
“The December quarter ANZ-Property Council survey shows a significant improvement in confidence in the property sector,” said David Plank, head of Australian economics at ANZ.
“Importantly, the increase in confidence has been seen across all states and territories and in most industries.”
The latest survey canvassed the views of almost 1,400 respondents, including owners, developers, agents, managers, consultants and government officials, across all major industry sectors and regions.
This chart from ANZ shows the lift in confidence towards the 12-month outlook for the sector, comparing the results from the prior quarter and a year ago.
Clearly, confidence is on the improve, particularly in Australia’s mining states.
“The most noteworthy result is the ongoing trend improvement across the mining states of Western Australia and Queensland,” says Plank.
“We have previously noted that the decline in mining-related investment and job losses are largely behind us, and the improvement in sentiment in these regions provides further support to that view.”
Outside of Western Australia, Plank says that sentiment levels remained high in Australia’s most populous states, New South Wales and Victoria.
“Sentiment across New South Wales and Victoria remained elevated, in line with their strong economies which have been the key drivers of Australia’s recent growth.”
Fitting with improved confidence levels across the country, survey respondents indicated that construction activity levels are likely to accelerate in the coming year, especially in non-residential sectors.
“The construction outlook for the aged care, industrial and office segments is at or around the strongest since this survey began,” says Plank.
“As of the December quarter, 81%, 49% and 47% of respondents in those segments respectively believed that construction will rise over the next 12 months.
“This positive outlook is consistent with recent building approvals data, which have been trending higher across these segments as well as tourism.”
For the residential sector, perhaps the area where concerns are most acute at present, confidence levels remained elevate, albeit off their previous peaks.
“Sentiment in the housing market generally improved in the December quarter,” says Plank.
“While the outlook is still much softer than during the earlier peak, solid outlooks for construction activity, prices and labour requirements all suggest that the slowdown in the housing market will continue to be a gradual cooling rather than a sharp decline.”
Strong levels of population growth, along with a recent stabilisation in building approvals and uptick in finance to buy and build new dwellings, has undoubtedly helped to bolster confidence levels in the latest survey.
This table from ANZ shows the net balance of respondents who expect construction activity to increase by various sector and state, looking at the evolution in responses going back two years.
And, in terms of the outlook for property valuations, respondents expect prices to lift across most states and sectors.
With confidence levels rebounding strongly, Plank says it bodes well on the outlook for non-mining investment, and with it broader economic growth.
“The outlook for construction activity is increasingly positive, with several sectors reporting the strongest outlook on record,” he says.
“This is consistent with ANZ’s view that non-mining business investment is set to record solid growth through 2018.”