ANZ/Property Council Survey signals revival of SA property sector
A survey of the state’s property industry reveals confidence is back following last year’s torturous land tax saga.
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Confidence in the state’s property industry has bounced back, according to the Property Council’s first survey of the sector since the passing of the State Government’s controversial land tax reforms.
The latest ANZ/Property Council Survey’s statewide confidence index jumped from 101 points in the December 2019 quarter to 117 for March 2020, where 100 represents neutral sentiment.
While the statewide result represents the biggest quarterly improvement across the country, confidence in SA remains lower than all other states and territories surveyed.
Property Council SA executive director Daniel Gannon said confidence was rebuilding following the uncertainty surrounding last year’s land tax changes.
“While South Australia still sits at the back of the peloton, confidence levels have picked up by 16 points since last quarter – the equal highest quarterly increase on record,” he said.
“Confidence is rebuilding and business uncertainty has been eliminated from the market.
“Property owners big and small now know what the tax environment will look like from July this year, which is important.”
The State Government won parliamentary approval of its land tax reform in November after securing the support of the Greens and Independent MP John Darley.
While land tax rates will be cut from July this year, investors will be forced to aggregate their property holdings for land tax purposes or pay a surcharge for properties held in trusts.
The Property Council spent four months campaigning against the changes, before backing a later version of the legislation which provided further relief to investors with portfolios valued over $1.1 million.
Prominent property developer Harry Perks, an early critic of the land tax reforms, was also won over by deeper rate cuts delivered in later versions of the State Government’s reforms.
“It’s ended fantastically - it’s brought us in line with other states,” he said.
“The state needs to be competitive and we’re now heading in the right direction.
“People are buying properties in South Australia from interstate, I think there’ll be more demand here, and with some population growth things can only get better.”
Knight Frank director Oliver Totani said investors across the country were becoming more active in South Australia following stalled market conditions during the land tax negotiations.
“There is no doubt the land tax conversation took investors’ eye off the ball, however with the thorn in SA’s side well and truly taken care of, we’re seeing a lot more interest in the local market,” he said.
“Adelaide has always provided value when compared to the eastern seaboard, however that value proposition now is backed by a compelling narrative and competitive tax regime.”
Last quarter, in the midst of the long-running land tax debate, the ANZ/Property Council Survey’s statewide confidence index slumped by 43 points.
It was the largest drop for any state in the history of the survey, with sentiment falling to its lowest points since 2012.
While the SA index remains six points behind the national figure, Mr Gannon said the trend was “back in the right direction”.
“South Australia is a commercial stamp duty free zone and now boasts a more competitive land tax regime, which as a package is a compelling proposition for investors,” he said.
“This state’s anti-competitive land tax rates and low thresholds have long discouraged investors from looking to invest here, which means it’s time to advertise our new tax settings.”
According to the Property Council survey, expectations around staffing and work over the coming 12 months are lower in SA than any other state or territory surveyed.
Queensland is the only state where respondents were less impressed with their State Government’s economic management.
“In terms of the State Government’s performance, we’re still in negative territory,” Mr Gannon said.
“This means there is much work to be done in order to restore trust in government decision-making.”