COVID reshapes property trajectory

The property industry is bracing for the impact of the coronavirus pandemic to last at least 12 months as sentiment tumbles sharply nationwide.

Property Council of Australia CEO Ken Morrison.

The property industry is bracing for the impact of the coronavirus pandemic to last at least 12 months as sentiment tumbles sharply nationwide.

Findings from ANZ and the Property Council’s latest survey of the industry show sentiment about residential and commercial property fell sharply in the June quarter in the wake of COVID-19’s disruption of global economies.

A majority of respondents expected to be negatively affected by the pandemic, with similar figures being recorded in each state.

In a special set of questions in the survey, 35 per cent said measures to stop the spread of the virus were already being felt in operations.

Social and economic uncertainty played an important factor in the findings, with rising unemployment, which is expected to surpass 10 per cent nationally, weighing on the minds of many and causing 10 per cent of businesses to question their viability moving forward.

Property Council chief executive Ken Morrison said the swift and dramatic impact on the industry across the country was surprising.

“What’s striking to me with these numbers is that a third of respondents said they already felt a serious impact from COVID-19 on their business,” Mr Morrison said. “That’s quite a quick impact it was having two weeks’ ago on people’s business.”

The industry outlook for residential was negative nationally, with 36 per cent expecting falls in house prices. All commercial sectors reported a decline in sentiment. Confidence in the tourism and retail sectors was the weakest, but sharp declines were also recorded in the office and industrial sectors.

ANZ senior economist Felicity Emmett said the true impact of the virus might not be felt for some time, as respondents’ forward work expectations over the next 12 months fell sharply, suggesting a shrinking supply pipeline.

“The impact is not going to be really concentrated now,” Ms Emmett said, noting the construction sector had been largely unaffected as yet. “It’s going to be over the next few months as that pipeline of constructions shrinks. Households and businesses are going to be very unwilling to make any decisions or commitments at the moment around purchases of new homes or businesses investing. There’s so much uncertainty about the economic outlook.’’

The survey of 918 participants took place over the two weeks between March 16 and 31. The time frame was before the federal government’s JobKeeper announcement, which may have affected the large declines in staffing expectations moving forward.

The survey had previously shown sentiment broadly rising over the past few quarters and had been expected to follow that trajectory over the course of 2020.