Industry confidence is approaching record levels as the economy recovers from the COVID-19 pandemic
Property industry confidence is approaching record highs – driven by government stimulus and record-low mortgage rates – as the property market leads Australia’s recovery from the COVID-19 pandemic.
The ANZ/Property Council of Australia industry survey for the March quarter found that national industry confidence had skyrocketed to 142 points – the second-highest level in the survey’s history. That’s an 80-point improvement over the last 12 months. A score of 100 is considered neutral.
Ken Morrison, chief executive of the Property Council, said the rising confidence was driven by record-high economic growth expectations.
“When the property industry is confident, it is exceptional news for the entire national economy because it employs so many people – more than 1.4 million Australians,” Morrison said. “While the economy still faces significant challenges, the property industry is clearly buoyed by the speed of our turnaround and the strong demand they are seeing, particularly in the residential and industrial sectors.”
The survey also showed easing concern about the office sector as more central business district employees returned to their workplaces.
Morrison said that government stimulus measures were in large part responsible for the property sector’s renewed confidence.
“Government stimulus and business support measures have done their job in supporting our industry and the economy over the last 12 months,” he said. “With many stimulus measures having now run their course, it is critical that this confidence is backed up by policymakers through measures that will continue to help reactivate our CBDs and upscale our quarantining capacity.”
The survey found that expectations for national economic growth spiked from 13 to 38 index points, the highest level in the survey’s 10-year history. Capital growth expectations over the next 12 months for the housing and industrial sectors are also at the highest levels ever recorded across all jurisdictions.
Over the next three months, 64% of survey respondents believed the impact of the pandemic on their business would improve.
“Property sentiment has improved again, reflecting stellar economic performance, a large pipeline of work for the coming year and a strong outlook for property prices,” said Felicity Emmett, ANZ senior economist. “The combination of record-low mortgage interest rates and targeted stimulus is clearly supporting the housing sector, where confidence is now at record levels. Price expectations are at all-time highs, while the HomeBuilder scheme, along with state and federal initiatives, has brought forward a large chunk of demand. This has more than offset the impact from low population growth and elevated unemployment.”
Emmett said the pandemic’s impacts continued to linger, however, with the outlook for the tourism sector still grim thanks to repeated state border closures and delays in vaccine rollout.