Property sentiment bounces back to growth

Date: 2020-16-12 19:30:25

Property industry confidence roared back in the fourth quarter, with a key measure of industry confidence recording its highest jump on record as increasing signs that COVID-19 was under control boosted sentiment and the ability of businesses to make decisions.

The ANZ/Property Council Survey for December rose 41 points from three months earlier to 123, more than double the previously largest quarterly gain of 17 points in 2013.

The gain reflected not just the quarterly bounce back in growth, signalling a technical end to the COVID-19 recession, but also a growing sense of confidence that the partial withdrawal over the quarter of support measures such as JobKeeper, boosting cash flow for employers, JobSeeker and household stimulus payments had not hit employment significantly, ANZ senior economist Felicity Emmett said.

“It’s not just a warm and fuzzy feeling,” Ms Emmett said.

“When you dig into the different indicators – eg, within industrial – it’s not just price expectations that have picked up, it’s construction activity, staffing levels, forward work schedules. This is about individual businesses and what they’re seeing on their books. There is quite a real lift in activity here as well as a sentiment issue.”

Work expectations and expected staffing levels for the next year have both turned sharply positive after three negative quarters.

“Industry is far more confident about the COVID situation – that underpins the performance of the economy – and there’s good reason for this confidence,” Property Council chief executive Ken Morrison said.

“But if this were to change, that would be quite significant.”

While confidence in the economy’s ability to shrug off the pandemic is growing, the effects of COVID-19 are changing. Hotel property remains the sector thought most likely to be hit by the virus but concerns are easing. In contrast, the latest survey shows that concerns about the impact of the pandemic on office property are growing.

“Hotels are thought to be less impacted compared with commercial office, where the impact is growing – around a realisation/perception that long term, commercial office will be impacted by changes around more flexible working and working from home,” Ms Emmett said.

Mr Morrison said, however, “it’s a bit early” to draw conclusions about the implications of the pandemic on office assets.

Industrial property remained the strongest sector, with capital growth expectations for sheds and logistics assets jumping to record highs in NSW, Queensland and Western Australia.

The survey, conducted between November 16 and December 2 among 837 respondents, showed a similar turnaround in expectations for housing capital growth, with that index leaping into positive territory after three negative quarters.

Results of the survey, conducted after the Reserve Bank of Australia on November 2 cut the benchmark cash rate 15 basis points to 0.1 per cent and embarked on a $100 billion quantitative easing program, also showed a surge in expectations that finance was going to be easier to secure.

The apparent success in controlling the pandemic is also yielding political wins, with perceptions of the ability of most governments – whether federal or state and territory – to create jobs and manage economic growth rising. Sentiment was the highest in record in NSW, Western Australia and South Australia.

It turned positive in Victoria after a sharply negative September quarter. Queensland was the only state where the perception of the government’s economic management remained negative.

 

https://www.commercialrealestate.com.au/news/property-sentiment-bounces-back-to-growth-1016224/

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