New data shows a significant cooling of expectations for residential construction in the December quarter but overall confidence levels remain firmly in positive territory recording only a one point drop nationally on the previous quarter.
The ANZ/Property Council Survey is the nation’s leading measure of confidence in the property industry which accounts for 11.5 per cent of GDP and is the nation’s second largest employer. The survey was completed by over 2200 respondents across Australia this quarter.
While nationally confidence remains well in the positive range, it has edged downwards over the four quarters for 2015 and the reading of 130 for December 2015 is five points below the same quarter last year.
New South Wales still leads the nation in terms of confidence at 144 points despite a two point drop and Victoria is holding steady at 134.
Queensland at 132 (up 2 points), the Australian Capital Territory at 135 (up 4 points) and the Northern Territory at 105 (up 11 points) all recorded rises in confidence for the quarter.
Meanwhile in other minor variations Tasmania came off one point to 142, South Australia fell two points to 118 while Western Australia flatlined at 102.
Property Council of Australia Chief Executive Ken Morrison said the results should be closely read by policymakers.
“The economy has relied on strong housing construction, so any softening would have a broader national impact particularly in terms of jobs and economic activity,” Mr Morrison said.
“In the December quarter we saw a drop in debt finance availability expectations across the board, which is evidence that our regulatory safeguards are functioning as intended.
“We need to keep a close watch on the many factors impacting activity levels, particularly in residential construction.
“Only recently have we started to chip away at the housing supply deficit that built up over a decade as supply fell well short of demand.
“Housing affordability into the future hinges on maintaining a high level of new residential construction to meet the demands of our growing population.
“The results from this survey make the task of removing the major roadblocks to further growth in the property industry more urgent.”
ANZ Co-Head of Australian Economics Cherelle Murphy said: “Respondents in the majority of states including NSW and Victoria (which together contribute more than 50% of Australia’s GDP) are less optimistic than 12 months ago. Those in the residential sector recorded a larger decline in confidence in the last 12 months than any of the commercial property sectors.
“As the housing sector softens, support to aggregate employment growth from hiring in construction and a range of services industries benefiting from housing activity is also expected to wane.
“Without above average employment outcomes in the rest of the economy, the unemployment rate could push higher. However the survey results suggest respondents expect further growth in property sector employment over the next 12 months.”