Property industry confidence
Confidence levels in the ACT property sector have risen according to a leading indicator of business sentiment.
The ANZ/Property Council Survey’s leading index for the December quarter of 2014 shows an upward shift in sentiment by 26 points to 127. A score of 100 points is considered neutral.
The quarterly survey polled over 2,500 property industry professionals across all Australian states and territories on their forward-looking views regarding the business and political environment, the economy, employment intentions and other factors.
It’s pleasing to see some improvement in confidence in the Territory given the slow-down in construction activity, largely as a result of Commonwealth Government spending.
There are some positive trends reported, notably an increase in forward work expectations and staffing levels which are expected to rise, and an increased level of positive sentiment around the retail, hotel and retirement sectors.
However, the ACT remains under the Australian average in terms of business sentiment, and there are a number of areas in which further focus is needed in order to lift and improve confidence. State economic growth expectations continue to be negative as well as government performance with respect to planning and managing growth remain negative.
As well, significant concerns about the high level of vacancy rates in the Canberra office market remain. Vacancy rates are currently at 13.6 per cent, according to the Property Council of Australia’s July Office Market Report. This highlights that further consideration needs to be given to the introduction of policies and programs to facilitate the upgrading or conversion of existing buildings to new uses, in order to promote growth in the areas of the city that need it.
The ACT Government has already taken steps to address this issue, through the introduction of its February 2014 economic stimulus package aimed at providing confidence and stimulus into the ACT economy.
However, in light of increasing vacancy rates, it is now timely to review changes made to the lease variation charge system to assess whether further remissions may be needed in order to stimulate activity in the market, drive economic activity and further increase confidence in the Territory.
Catherine Carter is ACT Executive Director of the Property Council of Australia