The ANZ’s quarterly property industry survey is out and shows a nice bump for this quarter
Property industry confidence strengthened in the March quarter, increasing on a more stable outlook for the global and Australian economy, compared to the previous quarter. Looking ahead, the mining investment boom is approaching a peak and the Australian economy will become increasingly dependent on a cyclical rebound in non-mining investment in the years ahead, with the property sector a key driver of this transition.
- The latest Property Council of Australia-ANZ Property Industry Confidence Survey reveals the improved economic outlook, combined with further RBA rate cuts, are having a positive impact on the property sector outlook. The Property Council of Australia-ANZ property industry confidence index increased by 5pts in the March quarter (107 compared to 102 in the December quarter), following a 4pt decrease in the December quarter.
- The March quarter survey polled more than 3,000 property industry professionals – the most comprehensive survey of Australian property industry views – and revealed stronger expectations for house price growth and positive expectations for property construction. This result reflects recent growth in building approvals and tight market demand/supply fundamentals in both commercial and residential property.
- Property industry confidence increased in all states and territories except Tasmania and the ACT in the March quarter. The states with the greatest exposure to the mining industry (WA and the NT) continued to report the highest confidence in level terms, followed by NSW. Victoria, Tasmania and the ACT were the only states/territories to report ‘negative’ confidence.
It’s interesting to observe the ANZ’s interpretation of the result, that it is rising because of a more “more stable outlook for the global and Australian economy”. The reverse is actually true with interest rate falling as a result. It’s the lower rates are boosting confidence as greater instability looms.
Whether they will work remains of course the critical question. While it is now well-publicised that building materials firms are preparing for a structural shift to lower activity, the same is obviously not the case for other members of the property industry that this survey covers. Confidence is rising among developers, real estate, finance and investors that some kind of recovery is taking hold. Expectations for price growth are up:
And for construction too:
Having said that, outside of Perth and Darwin, expectations remain very subdued. We might best see this result as a rise from very low expectations. A not unreasonable result.