Property confidence soars, despite headwinds

If you’re part of the property sector in Australia, you’re feeling pretty upbeat right now – so upbeat, in fact, that your confidence levels and positive outlook on the industry are at an all-time high. 

That’s the findings of the latest ANZ/Property Council Survey, released this morning and based on the views of some 830 owners, developers, agents, managers, consultants and government representatives across the country.  

Now in its tenth year, the quarterly national survey is one of the biggest sentiment measures in the Australian property industry and provides a temperature check on national, state and territory economies, property asset class performance, employment intentions, expected workflows and critical industry drivers.  

The March quarter results showed property sentiment at its best ever level, with record highs measured across numerous survey metrics – and WA property players are leading the way, with the most positive outlook Australia-wide.  

The latest survey results put WA at 157 index points in March 2021, representing a significant jump from the score of 133 recorded in December 2020 and well above the national confidence index measure of 142 points. A score of 100 is considered neutral. 

Given it’s been just over 12 months since the impacts of COVID-19 brought life as we know it to a screeching halt, and emptied CBDs, shopping malls, office buildings and workplaces around the globe, it’s a remarkable vote of confidence.  

But it’s also inextricably linked to the global pandemic, and how we’ve navigated the crisis as a nation.  

The drivers  

In revealing the Survey results, ANZ Senior Economist Felicity Emmett said the soaring sentiment levels were consistent with the much stronger than expected broad economic recovery in Australia. 

“It really is a very strong recovery – most economists are expecting very strong growth this year as we continue to come out of the COVID downturn, but also as the fiscal stimulus in the economy continues to flow through,” she said. 

“While many of those COVID-related measures are now coming to a close, a lot of impetus remains from earlier stimulus and that will underpin ongoing GDP growth and bring down unemployment.” 

Half of survey respondents said they expected the national economy to expand over the next 12 months, beating the previous record set in September 2013. At a State level, expectations for economic growth were at record highs in WA, New South Wales and the ACT, with others not far behind. 

And while 91 per cent of firms surveyed said they had been impacted by COVID, the number saying they considered themselves to be seriously impacted – affecting business viability – had fallen to just 1.4 per cent from a peak of 10 per cent at the same time last year. 

A tale of two sectors 

Confidence was broadly strong, but there were differences in industry sectors. Not surprisingly, the residential sector was the standout performer with all confidence measures up and three of them – prices, staffing levels and forward work schedule – at record highs on the back of homebuilder stimulus measures and historically low interest rates. 

Overall, 87 per cent of firms in the residential sector said they expected to see price gains over the next year, and 61 per cent expected construction activity to grow, up from 45 per cent in the previous quarter.  

“The residential sector has had the benefit of more government support, and hasn’t seen some of the longer-term headwinds faced by the commercial sector,” said Ms Emmett.  

The commercial sector had lifted, and had now recovered almost all of its COVID-related downturn, but was weighed down by a drop in the tourism sector thanks to ongoing uncertainty around snap border closures and the faltering vaccine rollout. 

Industrial property was a bright spot for the commercial sector, however. 

“Industrial property has been the biggest beneficiary of the pandemic thanks to the move to online sales, and the need for wholesale support and logistics,” said Ms Emmett. 

The view from the West  

In WA, Property Council WA Executive Director Sandra Brewer said the high industry confidence was a reflection of the State’s ability to weather the storms of COVID-19 and the sector’s confidence in the McGowan Government, which exceeded that of any other state or territory.  

When asked to nominate the most critical issues for state government, WA respondents put property taxes and charges (24%), vibrant city centres (22%) and housing supply and affordability (17%) at the top of their list. 

Ms Brewer said one approach offered an answer to all three, calling on the newly re-elected State government to throw its support behind apartment development. 

“A commitment to collaboration between industry and government provides the perfect platform to address some of the biggest handbrakes on growth,” said Ms Brewer.  

“Policies that support apartment development can address all three priorities. By eliminating the foreign buyers’ surcharge and making permanent concessions for off-the-plan apartment buyers, the McGowan Government can boost rental stock, meet infill targets and enhance the vibrancy of Perth’s CBD.”   

Fran Lawrence is Cannings Purple’s Director of Corporate Affairs and property specialist. Contact Fran here, or visit the Skyline website to find out how we can help you reach your property audience with targeted, credible content.