There’s light amidst the macroeconomic clouds as confidence in the property industry well above neutral, and holds strong from last quarter. Image: The Property Tribune.
  • The quarter confidence index rose 1 index point nationally
  • ACT recorded the highest confidence figures
  • WA was the only state to have house capital growth expectations above zero

The latest ANZ/Property Council survey has revealed confidence in the property industry remains unshaken despite a litany of macroeconomic challenges.

On the confidence index, figures rose nationally from 118 index points in June to 119 in September. A score of 100 on 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 was conducted between August 29 and September 13 this year.

Confidence Index

property council anz september 2022 survey confidence index
Confidence in property remained resilient. Source: ANZ/Property Council.

House price growth expected in WA

The survey has revealed that Western Australia is the only state where house prices are expected to grow.

For the September 2022 quarter, house capital growth expectations in Western Australia rose from -1.1 index points to 5.1 index points. That makes it the only state to have a score above zero.

House capital growth expectations

property council anz september 2022 survey house capital growth
Source: ANZ/Property Council.

“We have seen an increase in demand in residential property, but supply constraints have limited the ability of industry to bring new projects to market, with limited supply and added demand pushing house prices up,” said Property Council WA Executive Director Sandra Brewer.

Housing supply and affordability were a chief concern for the West, with 38% of West Australian respondents to the survey scoring the matter as the most critical issue for state government.

The next most important was vibrant city centres at 21%, followed by property taxes and charges at 16%, planning and regulation reform at 11%, and development around transport nodes rounding out the top five at 5%.

Canberra confidence leads the nation

The confidence index figures for the national capital jumped 15 index points from 120 to 135 for the latest quarter, making it the highest in the country and well above the national average of 119.

“This is a great result for Canberrans which confirms people in the ACT are not only resilient, but are confident and optimistic regarding the property industry,” said acting ACT Executive Director Dr Adele Lausberg.

“Canberra is a fantastic place to live, work and play which is backed up by the highest expectations for economic growth and the highest expectations for forward work schedules.

“Staffing level expectations more than doubled from 11 to 25, the largest increase in the country, reflecting positive signs around future migration rates increasing.”

Dr Lausberg said over the next 12 months respondents believe capitalisation rates in their sector will increase in both prime and secondary assets.

“Prime rates are expected to increase moderately (just under the Australian average) whilst secondary are expected to grow significantly – the highest expectations in the country,” she 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.”

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