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Good News for the Housing Market, Sounds Good Hey

Wednesday, April 24, 2013

According to new research sentiment within Australia’s property industry has risen to an 18 month high, driven by increased confidence in the housing market and easing financing conditions,.

The latest Property Council-ANZ Property Industry Confidence Survey shows the confidence index for the June 2013 quarter jumped from 107 to 124, the second consecutive quarter of growth (a score of 100 is considered neutral).

The survey polled more than 3100 professionals from the property and construction sector in all states and territories for their forward-looking views.

“While consumer and business sentiment continues to be subdued, the bulk of Australia’s property industry have shifted to a more positive outlook on the future,” says Property Council Chief Operating Officer Ken Morrison.

“Last year’s fence sitters have removed the splinters and made a clear decision to walk on the sunny side of the street.”

“This improved outlook is led by record confidence in the residential sector, and project funding expectations which are now positive for the first time.”

Key findings of the Property Council-ANZ Property Industry Confidence Survey are:

  • Overall sentiment up again: national property industry confidence has increased for the second consecutive quarter, from 107 to 124 on the index.
  • National economic expectations now positive: national economic growth expectations are now positive for the first time, increasing from 89 to 106.
  • Residential continues to build: expectations for house price growth increased 17 points on the index to a record of 124, continuing positive prospects for a housing recovery.
  • Residential construction expectations continue upward trend: since the survey began in 2011, construction activity expectations have increased the most in the residential sector.
  • Funding breakthrough: confidence in funding projects is now positive for the first time since the survey began, increasing from 100 to 110.
  • Spike in new work expectations: Forward work expectations which have been flat over the last nine months increased significantly from 125 to 138 and are consistent with national staffing level expectations.
  • Big states lead the way: NSW, VIC, WA and QLD recorded the largest increases in sentiment.
  • Tick of approval for QLD government: QLD joins WA respondents as the only states who believe that their government is doing a good job planning and managing growth. NT’s government performance index has recorded a massive decline from 91 to 54, putting it on par with that of TAS.
  • Cap rates to diverge: Prime cap rates are expected to compress, with the most compression expected in NSW, while secondary cap rates are expected to ease across the board.


ANZ Chief Economist Warren Hogan says “notwithstanding renewed European concerns and rising tensions on the Korean peninsula, global economic and market sentiment have improved markedly in 2013. Expansive monetary policy settings have buoyed global liquidity and equity markets have rallied strongly.”

These factors, combined with low interest rates and improved buyer/investor interest have boosted property market sentiment.

“Increased population growth and subdued home building activity will see demand/supply fundamentals tighten further,” Mr Hogan said.

Further, Mr Hogan said “The RBA will likely retain a mild easing bias in 2013, and we continue to expect an extended period of low interest rates, with property markets likely to be a key beneficiary.”

All in all, this economic data is very positive for the property investment market.

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