The confidence level of the nation’s property industry has hit a fresh high as the sector expects to benefit from strong house price growth, a new survey has found.
The Property Council/ANZ Property Industry Confidence Index to March 2014 finds property industry confidence has climbed to 140 points, up eight points since the December survey. The uptick in confidence was driven mainly by New South Wales and Queensland.
The quarterly survey found capital growth was likely to rise in all asset classes, with the residential sector seen as the big winner. The level of new construction activity is also tipped to rise.
Peter Verwer, Property Council of Australia Chief Executive, said the expectations for the March quarter were for broad-based gains, with no state or territory left out.
“Positive expectations about house price growth and significant expected increases in residential construction activity across the nation are driving a strong upturn in confidence for the property industry,” he said.
“The industry has been buoyed by strong staffing level increases across the nation over the last three months and is confident of further increases in staff hiring over the next 12 months."
Mr Verwer said he expected the property sector to play a major role in filling the void left in the economy by a deflation of the mining boom.
“The message from Australia’s largest business confidence survey is that it is property and construction, the industry that employs more people and contributes more to GDP than any other, that will lead the way to future prosperity,” he said.
ANZ Chief Economist Warren Hogan said the property sector was a rare positive story amid a flagging economy, with the latest expectations doing little to alter the view that economic growth will be below trend in the near-term.
“Outside the property sector, the improvement in business sentiment has been tentative and the near-term outlook for the Australian economy remains subdued. Mining investment is winding down from unsustainable highs and the public sector will likely detract from growth in the near-term,” he said.
“Hence, despite a solid recovery in the property sector, ANZ expects that Australia will experience below-trend growth over the next 12-18 months.”
Mr Hogan added that the country was set for “an extended period of low interest rates,” which the real estate sector expects to again be beneficial in 2014.