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Confidence in property dips in March

Confidence in Australia’s property sector fell slightly over the March quarter but remains at historically elevated levels, according to the latest ANZ/Property Council’s industry survey.

The Confidence Index fell five points to 137 nationally compared to the previous quarter, however, sentiment remains well above the 100 level which is considered neutral.

This confidence continues to be buoyed by optimism about the economic outlook, although rising house prices have seen concerns around affordability reach record levels.

Property Council of Australia Chief Executive, Ken Morrison said that with the election only a few weeks away, housing affordability is shaping up as a key issue.

“Housing supply and affordability topped the list of major issues to be addressed by a Federal Government over the next 12 months, with its strongest response in the history of the survey,” Mr Morrison said.

“Research from the Property Council of Australia recently revealed almost 70 per cent of voters fear younger people will never be able to buy a home in this country, with 90 per cent of those trying to enter the market indicating it was the most important issue in deciding their vote in the May Federal Election.”

ANZ-Property Council Confidence Index. Source: Property Council

Mr Morrison said stronger overall high levels of confidence throughout the industry are positive for the economy.

“The industry’s forward work expectations have continued to lift this quarter and so have their staffing level expectations,” he said.

“This means that the property sector – which employs more Australians than any other sector – is set to hire more people and deliver more work, something both sides of politics should welcome as we begin the Federal Election campaign.

“Given the extent of turbulence the sector has suffered over the previous quarter this is a resilient outcome that stays above the historic average.”

The survey, taken between March 15 and 30, showed future work expectations lifted in every state and territory except the ACT over the quarter, with the biggest jumps recorded in SA (40 to 48 index points) and WA (45 to 53 index points).

Job creation expectations also increased substantially in QLD (20 to 32), Victoria (19 to 35) and SA (30 to 42).

ANZ Senior Economist Felicity Emmett said commercial property confidence climbed in the quarter, buoyed by improving sentiment in the industrial, retail, and tourist sectors, while residential property confidence fell somewhat but remains stronger than it was pre-Covid.

“Industrial property sentiment continues to power ahead, with the strong construction outlook backed up by the sharp lift in building approvals over the last few years,” Ms Emmett said.

“The opening of the international borders has buoyed tourism sentiment, lifting it to its highest level since 2018.

“While retail and office property sentiment remain in positive territory, they face headwinds, particularly office property, where sentiment declined in the March survey.”

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Rowan Crosby

Rowan Crosby is a senior journalist at Elite Agent specialising in finance and real estate.