Confidence in the property industry is increasing while house prices are likely to stabilise, according to a report published today by ANZ.
The Property Council of Australia-ANZ Property Industry Confidence Survey revealed a more optimistic property industry outlook with confidence increasing by six points in the June quarter to 113 compared to 107 in the March quarter.
The 2,300 professionals polled from the property and construction sector tipped house prices to stabilise and their own forward work schedules to lift.
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The index shows improved confidence underpinned by an improved outlook for the economy and construction activity and more optimistic expectations for commercial property capital growth and house prices.
House price expectations in the June quarter indicate the property industry see prices levelling out, with 73% of all respondents expecting house prices to increase or remain unchanged in the next year.
With existing underlying housing market pressures, expectations of further rate cuts and a stabilising economic outlook, house price expectations are improving.
On balance, the property industry expects prices to be largely unchanged in the next year.
The majority of respondents to the survey in all states and territories, except Tasmania, expect house prices to be the same or higher in the next year.
Despite a soft labour market and non-residential building approvals running below long-run average levels, the outlook for commercial building activity looks positive.
Almost 60% of those surveyed expected forward work schedules to increase in the coming year.
The most positive forward work expectations were reported by the NT where 83% expect forward work programs to increase, followed by Western Australia, Queensland and New South Wales.
Tasmania reported the weakest forward work expectations, with only 38% of respondents expecting work to increase in the coming year.
Despite weak employment growth through 2011 and job shedding in manufacturing, finance and retail industries, the property industry reported a positive outlook for staffing levels in the year ahead.
Property industry staffing levels are expected to increase across all states and territories, except Tasmania.
ANZ chief economist, Warren Hogan, told SmartCompany the main message from the index was that confidence in the industry is getting better particularly in the outlook for activity and also concerns around house prices.
“The other message is consistent with what is happening in the broader economy with quite a bit of regional diversity with the mining states really going from strength to strength, while a couple of the states are lagging, like Tasmania and Victoria,” says Hogan.
Hogan says while Australia’s mining and engineering-construction sectors boom, retail spending, non-mining related manufacturing, public services and tourism will remain under pressure.
“Hopefully it means the housing market continues to strengthen, particularly from an activity point of view as there has been a concern about a shortage of housing in the country,” says Hogan
The property market seems to be in a recovery after some softness last year.”
“Overall the industry is more confident as acute concerns over global economic conditions ease,” said Property Council chief executive, Peter Verwer.
“Respondents are feeling less buffeted than in previous quarters, where the storm in commodity prices, global economic insecurity and domestic political uncertainty contributed to negative sentiment.”