Dark clouds on residential construction horizon

Optimism about the prospects for economic growth is still comparatively high in NSW but construction activity expectations in the residential property sector have dropped dramatically in the 12 months to September 2016 according to a new survey.

The ANZ/Property Council Survey is the nation’s leading measure of industry confidence, with almost 1,600 respondents across Australia and 573 in NSW this quarter.

Construction activity expectations in the residential sector fell by 45.9 index points between September 2015 and September 2016.

“This dramatic drop is concerning for the future of housing supply in NSW especially in the context of the new state taxes on foreign investment in residential property,” NSW Executive Director Jane Fitzgerald said.

“Construction expectations are down slightly in the other asset classes of retail, office, industrial and retirement but the drop in the residential class is more than seven times worse than the others.

“The survey underscores the fact that these are bad taxes being imposed at the wrong time.”

Ms Fitzgerald said that the new data, compiled before the new taxes were announced, highlighted that the State’s housing supply – and the affordability of houses – was already at risk and the new taxes would only worsen the outlook.

The shift in sentiment in the Construction Activity Expectations Index over the 12 months to September 2016 is:

  • Residential – down 45.9 index points
  • Retirement – down 6.3 index points
  • Industrial – down 3.3 index points
  • Office – down 1.9 index points
  • Retail – down 1.6 index points
  • Hotels – up 0.4 index points

The survey also showed that general confidence levels had dropped slightly in the past quarter – from 143 down to 139 on an index where 100 is neutral – however confidence levels in NSW were still above the nation-wide average of 128.

Media contact:  Jane Fitzgerald  |  E  jfitzgerald@propertycouncil.com.au