Stimulus key to property confidence recovery

Pandemic stimulus measures and low rates have helped drive property industry confidence to record levels, according to the latest sentiment from ANZ and the Property Council of Australia.

Residential confidence has soared amid rising prices and work brought forward.

Confidence throughout the property industry has strengthened across the board as the house prices surge and commercial sectors recover from the pandemic hit.

The ANZ/Property Council of Australia’s latest sentiment survey showed an improvement across all states and territories over the March quarter, with the national index up 19 points.

Pandemic stimulus including HomeBuilder has brought forward work and created a strong pipeline of activity through the remainder of 2021, while low rates have spurred price growth in the established housing market.

ANZ senior economist Felicity Emmett said residential property is “firing on all cylinders”.

“Residential is really leading the pack and residential optimism was the highest on record and, if you look at the breakdown of all the different indicators, construction pricing, staffing and forward work, they are all in very positive territory,” Ms Emmett said

“Something I think that’s really apparent in the survey is the boardbased strength across different segments, and also different geographies.

“Clearly that’s the economic recovery and the significant amount of stimulus that’s still in the system is but easing monetary policy is obviously really helping to support the sector.”

The change takes Western Australia to its highest ever confidence score after it consistently rose over the past four quarters. Staffing, forward work and state growth expectations each surged in the west to reach the highest levels on a national scale.

National confidence is on par with the same quarter of 2018.

Industrial property continued to return a strong rise in confidence for the third consecutive quarter, while retirement rose for its second. While still largely negative, both retail and hotel sectors recorded some improvement.

Office landlords have become increasingly positive as workers continue to leave their home offices. Confidence in the sector is still negative in all states bar South Australia, but few are reporting the mass return of leasing space to the market initially expected.

The only commercial arm to record a significantly greater hit from COVID-19 was the hotels, tourism and leisure sector.

“These repeated state border closures and the uncertainty around the vaccine rollout and when borders will reopen, that's obviously a factor for tourism,” Ms Emmett said. “Especially for those firms that are more exposed to international tourism.”

Following the strong growth, the concern among industry is now turning to population growth and housing affordability. Property Council chief Ken Morrison said this was being driven by uncertainty.

“The residential sector is very, very strong, with the exception of apartments. But (industry is) looking beyond this JobKeeper and HomeBuilder period and seeing that the normalisation of population growth needs to be addressed and, at the moment, the timelines around international borders are very unclear,” Mr Morrison said

The survey was conducted between March 15 and 31, prior to the Brisbane COVID-19 lockdown. It received 830 responses.