NAB's commercial property index recorded its first positive read since the first quarter of 2011, but the picture was mixed across the country, with WA sentiment falling to an all-time low.
Retail sentiment is recording a positive reading on the index for the first time since the fourth quarter of 2010, underpinned by stronger market conditions in Victoria and NSW.
While the overall index improved, the picture was mixed across the country.
"Sentiment in Western Australia fell to an all-time low (and weakened in South Australia and the Northern Territory), with the longer-term outlook in WA also deteriorating further," NAB chief economist Alan Oster said.
Large falls in capital values and rents in Western Australia were reported as downsizing continued in the resources and resources-related sectors, which led to the crashing sentiment.
In contrast, sentiment improved in all other states, with NSW the strongest and most optimistic state in the next one to two years.
"As a result, the gap between WA and the other states continues to widen” Mr Oster said.
Overall market sentiment improved in all sectors, led by CBD hotels.