Property Industry Confidence Boosted In The Fourth Quarter

Property Industry Confidence Boosted In The Fourth Quarter

The fourth quarter of 2020 had been a confidence booster for the property industry. According to the latest ANZ/property council survey, the national industry confidence score for the December 2020 quarter surged by 41 index points to 123 points, returning to the same level before the COVID-19 pandemic.  This was the biggest quarterly index increase as COVID-19 was under control which boosted sentiment and the ability of businesses to make decisions.

Felicity Emmett, a senior economist at ANZ, said this gain does not only reflects a quarterly bounce back in growth that signals a technical end to the COVID-19 recession but 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.

Work expectations and expected staffing levels for the next year have both turned sharply positive after three negative quarters. It’s not just price expectations that have picked up, construction activity, staffing levels, forward work schedules. This is about individual businesses and what they’re seeing on their books.

Ken Morrison, Property Council chief executive says the industry is far more confident about the COVID situation that underpins the performance of the economy. 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, the commercial office will be impacted by changes around more flexible working and working from home. However, Mr Morrison says it’s a bit early to conclude the implications of the pandemic on office assets.

The 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 official interest rate to 0.10 per cent from 0.25 per cent and announced a quantitative easing program of $100 billion, which also showed a surge in expectations that finance was going to be easier to secure.

The success in controlling the pandemic also yielded political wins, with perceptions of the ability of most governments to create jobs and manage economic growth rising. The sentiment was the highest in a record in NSW, Western Australia and South Australia. It turned positive in Victoria after a negative September quarter. Queensland was the only state where the perception of the government’s economic management remained negative.

References

  • Property confidence on the rise

https://research.propertycouncil.com.au/blog/property-confidence-on-the-risey

  • RBA cuts rates start $100b-plus QE

by Matthew Cranston

https://www.afr.com/policy/economy/rba-cuts-interest-rates-to-0-10-starts-100b-qe-20201103-p56b11

  • Property sentiment bounces back to growth

by Micheal Bleby

https://www.afr.com/property/commercial/property-sentiment-bounces-back-to-growth-20201210-p56mf4