15 January 2014 – What’s the mood for 2014?

Very good indeed if you ask the property industry. The Property Council/ANZ Property Industry Confidence Index to March 2014 says the love affair with the resources sector is all but over and for the Australian economy it’s back on with its one true favourite, property.

Residential property is the belle of the ball (as usual: in Australia, when house prices are rising, all’s right with the world) but there are plenty of takers crowding out the dance card for all the other belles as well.

“Almost all asset classes across the nation are expected to enjoy capital growth over the coming quarter with residential the big winner,” the survey found.

“And while capital values are expected to rise, so is the level of new construction activity with more activity planned over the next 12 months.”

The survey says the surge in confidence has been a massive eight points on the same period last year. Firms have been hiring strongly in the past three months and they’ve no intention of stopping any time soon.

According to Property Council of Australia chief executive Peter Verwer,  “The industry has been buoyed by strong staffing level increases across the nation over the last three months and is confident of further increases in staff hiring over the next 12 months.”

But no, there’s not much hope to credit newly minted prime minister Tony Abbott with the turnaround.

“It is now clear the bounce in confidence is not solely due to a return to stable government.” Verwer says.

“This is more than a bounce due to political events – this is Australia’s largest industry powering back up after a long period of consolidation.

“As Australia’s politicians look for a solution to boost economic growth and create jobs, the clear answer is the property industry.

“The message from Australia’s largest business confidence survey is that it is property and construction, the industry that employs more people and contributes more to GDP than any other, that will lead the way to future prosperity.”

ANZ Chief Economist Warren Hogan agrees. “A buoyant property sector is leading the broader economy out of the gloom that has prevailed in recent years bolstered by low interest rates and solid investor demand for both residential and commercial property.”

The outlook isn’t so good for business outside of property. (Wrong party, wrong dress code?).

Overall economic growth will be below trend for the next 12-18 months, Hogan says.

This will mean “an extended period” of low interest rates.

(In the past however, you might notice that the Reserve Bank has very much looked to property for its interest rate settings. A booming resi market has always given it the spooks.)

Hogan says this time, though, the Reserve will pay special attention to the Aussie dollar.

2 replies on “Property centre stage again as confidence surges”

  1. A great article with some positive news for a change.
    I would argue if the catalyst is political or industry “Consolidations”, depending upon your definition of “consolidation”.
    One assumes the term “industry consolidations” means companies going broke and reducing the competition. (at least 4 big builders gone in the last two years, Kell and Rigby, Southern cross, Reed, St Hilliers).
    Over the last couple of years we have read in the media (and possibly here) about companies holding on to their cash until the government stabilizes, then they have a big spend, which is essentially what I believe we are seeing now.
    I can’t see “industry consolidations” generating work, based upon the above definition, doesn’t make sense.
    Regardless, i’m glad to see the industry coming alive again

  2. A great article with some positive news for a change.
    I would argue if the catalyst is political or industry “Consolidations”, depending upon your definition of “consolidation”.
    One assumes the term “industry consolidations” means companies going broke and reducing the competition. (at least 4 big builders gone in the last two years, Kell and Rigby, Southern cross, Reed, St Hilliers).
    Over the last couple of years we have read in the media (and possibly here) about companies holding on to their cash until the government stabilizes, then they have a big spend, which is essentially what I believe we are seeing now.
    I can’t see “industry consolidations” generating work, based upon the above definition, doesn’t make sense.
    Regardless, i’m glad to see the industry coming alive again

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