The June ANZ-Property Council survey for the June quarter shows that firms are “increasingly optimistic” regarding their outlook for the property sector.
Persistent positive sentiment comes despite the fact that survey respondents across all states and industries reported that funding conditions are tighter and higher interest rates are expected. According to the survey, these factors “have not dampened optimism” in the housing sector.
ANZ head of Australian economics David Plank highlighted that the survey shows an improving outlook for the property market and the Australian economy, which is “broadly consistent” with recent data.
“We expect economic growth will continue to pick up from here, and return to around 3 per cent over the next two years,” he said.
Mr Plank emphasised that the survey’s renewed confidence in the housing sector is of particular interest.
“Expectations of price growth continue to rise, and the outlook for construction activity and staffing requirements have also picked up. This is coming at the same time as businesses firm up their expectations of higher interest rates, and report that funding conditions continue to tighten.
“The prospect of further house price growth, on top of an already-hot market, is likely to exacerbate housing affordability concerns, which are expected to be addressed in next month’s Commonwealth Budget,” he added.
Further, the analysis of the survey underscored that while highly indebted households are vulnerable to any significant increases in interest rates, still-strong sentiment in the sector appears to be underpinning the strong price outlook.
“Prices have continued to accelerate in recent months, with house prices in Melbourne and Sydney up between 15 and 20 per cent over the year to March 2017. Auction results remain elevated and paint a positive picture of demand for housing. As a result, 49 per cent of firms surveyed expect house prices will continue to rise over the next 12 months – up from 42 per cent last quarter and 35 per cent a year ago,” it said.
The survey also showed a variation in sentiment across the country.
NSW is still the most optimistic state. Meanwhile, the biggest shift in confidence over the past three months has been in Western Australia, where the outlook for the property sector is now at the strongest level in nearly three years.
“Western Australia saw a particularly sharp jump in sentiment in the June survey, supported by stronger commodity prices and the result of the state election. But the remaining challenge facing the state is being able to convert this improving outlook into actual activity,” Mr Plank commented.