New survey: confidence in economy up, housing construction down

The property industry finished the year more confident about the national economy but expecting lower levels of housing construction in 2016, according to new data released today.

The ANZ/Property Council Survey is the nation’s leading measure of confidence in the property industry, an industry which makes up 11.5 per cent of GDP and is the nation’s second largest employer. Over 1,500 business people completed the survey across Australia this quarter.

Property Council of Australia Chief Executive Ken Morrison said the results showed the industry would still provide some economic growth in 2016,  with lower housing construction activity expected than last year 2015.

“Property will still be a growth driver for the economy in 2016, even with an expected easing of housing construction levels,” Mr Morrison said.

“Industry confidence levels remain strong, forward work levels and staffing expectations are positive, and the industry expects non-residential construction to improve.

“Overall industry confidence edged up one point to 131 in the last quarter, with only NSW and ACT easing slightly and WA dropping again.  WA is the only state with confidence in negative territory.

”In the first survey since the federal leadership change, expectations of national economic growth leapt in every state.

“This is a positive sign for the Turnbull government’s focus on tax reform, innovation and cities, but the industry will expect results in 2016.

“A policy reform agenda that can strengthen the property industry’s ability to expand, employ and invest would help strengthen Australia’s economic performance.”

ANZ Chief Economist, Warren Hogan, said a number of factors that drove Australia’s growth through 2015 will wane in 2016.

“We expect that the housing sector’s contribution to growth is set to ease, through softer construction activity and a reduced ‘wealth effect’ from weaker price growth,” Mr Hogan said.

“The housing market has clearly eased through the second half of 2015. Triggered by the impact of tighter mortgage lending regulation for investors and higher mortgage lending rates, housing market sentiment has weakened sharply.

“The pipeline of commercial property construction, however is gradually growing.

“Capital growth has strengthened across most commercial property sectors, with the expectations of capital growth strongest in retail and tourist accommodation property”.