Residential boosts confidence

17 January 2013

Ainslie Chandler - The Australian Financial Review, Thursday 17 January 2013

 

Confidence in the Australian real estate sector has jumped in the past three months, with lower interest rates buoying hopes of improved condi­tions in 2013, according to an indus­try sentiment survey.

The Property Council of Aus­tralia/ANZ Property Industry Confi­dence Survey for the March quarter showed confidence rose from 102 index points in the December quarter to 107 points, where 100 indicates a neutral score.

"There has been a significant improvement in global sentiment and risks of major downturn have receded quite significantly. I think that in part is reflected in the latest results," ANZ's head of property research Paul Braddicksaid

Much of the momentum had come from the residential sector, where con­fidence was being bolstered by an improving economic outlook, low rental vacancy levels, lower mortgage interest rates and improving auction clearance rates in late 2012, he said.

"A lot of it reflects the cycle, there has been a poor environment for the past few years," Mr Braddick said. "With [recent house] price falls and growth in household incomes, the scene is set for a reasonably strong cyclical recovery."

The outlook for the office sector was not as rosy, with capital growth expectations turning negative during the period.

"Rents have stalled in the past 12 months, and weakness in the labour markets means people are concerned about where the space absorption is coming from," Mr Braddick said.

Sentiment towards the retail prop­erty sector remained negative at 93 points but had improved from the December quarter result. Price growth expectations for the industrial sector improved slightly, remaining modestly positive.

The healthiest outlook was for capi­tal growth in the retirement sector, where respondents expected more than 10 per cent price growth in 2013.

Forward work expectations remained positive and expectations regarding future staffing levels stabi­lised at 103 index points after a period of increasing concern. Respondents were neutral on the availability of debt finance, which represented a major sentiment improvement.

By state or territory, the biggest shifts were in Western Australia and Queensland, where concerns regard­ing the end of the resources boom seemed to lessen during the quarter.

However, despite the industry see­ing the potential for "green shoots" in 2013, Property Council of Queens­land executive director Kathy Mac-Dermott said concern remained, fol­lowing a year of major change.

"Drastic changes at state and local government level, the September Queensland state Budget, volatility in international economic markets and conflicting information around the resources boom have made for an extremely touch year for the industry," she said.

Despite sentiment improving slightly during the quarter, Victoria remained the most negative of the large states, amid ongoing economic uncertainty. Only the ACT and Tas­mania posted more negative scores than in the prior quarter.

The survey included more than 3000 professionals working in the property or construction sectors.

 

 

 

 

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