Expectations for residential construction in the December quarter have dropped considerably, while overall confidence levels have taken a one point fall compared to the previous quarter, according to the ANZ/Property Council Survey.
Although national residential construction confidence remains positive, it has suffered a slow descent over the past four quarters of 2015. December 2015’s level of 130 is five points below the same quarter last year.
“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,” said Cherelle Murphy, ANZ co-head of Australian economics.
The nation’s leader in confidence is New South Wales, at 144 points (despite a two point drop), while Victoria retains its confidence at 134. Queensland is at 132 with a 2-point increase and the ACT is at 135, up 4 points.
The Northern Territory posted 105, enjoying a significant increase of 11 points from last quarter.
On the other hand, not all cities saw improvements in their confidence levels. Tasmania is at 142, falling one point, while South Australia is two points less at 118. Western Australia kept its previous level of 102.
“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,” said Murphy.
Murphy offers a warning, but remains hopeful for the next year.
“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.”
Ken Morrison, chief executive of Property Council of Australia, hopes that policymakers will take a close and careful look at the figures.
“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,” he said.
“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,” he stated.
He then offered his take on how the industry could improve.
“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.”
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