Property outlook jumps amid easier credit hopes

Confidence in the property outlook for the first quarter of 2020 has jumped, amid credit easing and price growth hopes.

The property outlook is showing improvement Picture: AP

Confidence in the property outlook for the first quarter of 2020 has jumped, as credit easing and price growth hopes offset broader economic concerns, according to ANZ and the Property Council’s latest sentiment survey.

Residential and commercial property sentiment rose nationally in the first survey of the year, climbing five index points from the December quarter of 2019. Perceived easing in access to credit played a significant role, with expectations of the availability of finance back to 2015 levels.

The results support continued signs of improvement within the property market nationally, shown through almost 10 per cent price growth in Sydney and Melbourne over the past six months, a sharp pick-up in auction clearance rates and improvements in housing finance, ANZ senior economist Felicity Emmett said.

“The improvement in the residential property market seems set to continue,” Ms Emmett added. “The continued improvement in credit availability suggests the outlook for construction activity, not just prices, should begin to pick up in coming months — initially through a stabilisation and then an up-tick in building ­approval.”

Respondents in all states and territories expect house price growth to continue in 2020, building on sentiment from the end of 2019 after five quarters of negativity. But Ms Emmett warned that current strong monthly price gains would moderate in 2020 as more sellers listed their homes and lending policies stayed relatively constrained.

At the same time, residential construction activity expectations moved back into positive territory after reporting a negative result for the past 18 months. Forward work expectations and staffing levels remained strong.

The survey result was in contrast to yesterday’s commencement data released by the Australian Bureau of Statistics that showed home starts in the September quarter fell 27.2 per cent year on year. Housing Industry Association senior economist Geordan Murray said the numbers would probably improve over the coming months.

“It was a really poor result reflective of the poor sentiment in the first half of 2019,” Mr Murray said. “In the second half of the year, things picked up. Sentiment improved and builder reports suggest activity has picked up. ”

While the survey results are encouraging news for the industry, Property Council chief executive Ken Morrison said housing affordability would prove a challenge for policymakers.

“Coming off the back off a sustained drop in new housing approval and construction starts, we must be vigilant to ensure housing supply keeps up with demand, including population growth, as the residential market reboots,” Mr Morrison said.