Property confidence surges at year end

The property industry has seen confidence roar back to pre-pandemic levels through the final quarter of 2020.

Property Council boss Ken Morrison said fundamentals should remain strong despite the impending wind-up of funding next year.

The property industry has seen confidence roar back to pre-pandemic levels through the final quarter of 2020 as fears of an economic downturn ebb.

As Australia’s health predicament improved and the country emerged from recession, confidence in the property industry spiked 41 index points in the three months to December in what was the biggest rise ever seen in the Property Council-ANZ quarterly survey.

All fundamental markers to a healthy property market – forward work commitments, staffing levels, debt finance accessibility and economic growth – moved into positive territory over the quarter, with the latter becoming optimistic for the first time in six quarters.

Questions focused on the future impact of COVID-19 saw some of the biggest change in responses. Seventy per cent of businesses expect conditions to improve moving forward, up by 19 per cent on the previous survey. On the flip side, only 7 per cent believe impacts will get worse.

ANZ senior economist Felicity Emmett said the improvement showed a “very concrete turnaround” in property industry expectations.

“Everyone is feeling much more confident about the economic outlook,” Ms Emmett said.

“The economy has performed a lot better than people expected, and the outlook is really a lot better. I think that is where a lot of that confidence is coming from, for the general outlook but also for people’s actual businesses.”

Confidence improved most in Victoria as the state emerged from lockdown, up 51 index points to enter positive territory for the first time in over a year at 115 points. All states and territories included in the survey reported big jumps, with Western Australia (133 index points) and South Australia (128 index points) the strongest markets.

Each sector also improved significantly in the December quarter, but none more so than residential. Government stimulus still appeared to be playing a considerable part, with 79 per cent of developers operating in the residential space expecting the $25,000 HomeBuilder grants to have a positive impact on their business over the next quarter.

Property Council boss Ken Morrison said fundamentals should remain strong despite the impending wind-up of funding next year.

“There’s no doubt that Commonwealth and state and territory government economic stimulus and business support measures have done their job in supporting our industry and the economy through the worst impact of COVID-19,” Mr Morrison said.

“Even as stimulus measures are being wound back, critical industry confidence metrics such as forward work and staffing across all market surveyed have returned to strongly positive results.”

Capital growth sentiment was positive in the industrial and retirement sectors. While property players in the office, retail and hotel space began to feel more optimistic, sentiment was firmly negative.

There were 837 respondents to the online survey conducted between November 16 and December 2.