Property Investors – Predictions Following the Federal Election
As Australia leans towards a potential change in government, a new survey has been released that estimates how property investors must be feeling about the housing market as prices continue to decline. According to the ANZ Property Council industry confidence index for the 2019 June quarter, property sentiment has suffered further damage with the Treasury predicting there isn’t going to be any sudden change of positivity for the market any time soon.
At the lowest level it has been since March, 2013, the index fell to 115 index points – the fourth consecutive decline. This fall has been consciously noticed in majority of the states across Australia, with the exception of the ACT. With the most substantial falls noticed in Melbourne (33 points), Sydney (32 points) and Queensland (26 points), the capital territory declined only a mere 7 points.
With the capital value sentiment collapsing to the lowest level seen since the beginning of the survey, the value of homes are also expected to deteriorate. Sentiment fell to the greatest degree in New South Wales with a decline to 62 points, Followed closely by VIC, QLD and WA. However, the recordings from SA were on a slightly more positive scale.
CEO of the Property Council of Australia, Ken Morrison, advised that this decline in sentiment is a powerful factor as one of the economy’s biggest backers. Mr Morrison noted “The downturn in residential markets is driving this confidence slump, but we’re also seeing a less positive outlook across a number of important indicators, including expectations around national economic growth, construction and capital growth across some property types. The key message for policy makers is to keep a sharp focus on the property industry and be prepared to step up with a housing contingency plan if that’s what the economy needs. It is certainly a bad time to be risking changes to policy settings such as negative gearing and capital gains tax, which may lead to a further drop in confidence across the industry.”
Nonetheless, the survey also provided evidence that the finance sentiment has actually increased, which screams positivity for the housing market, according to David Plank, ANZ Head of Australian Economics. “The turn in finance availability capture in this survey could signal a turn in the market. Certainly it suggests we may be past the worth of the downturn in building approvals,” he stated. “We need to be cautious, though, about the outlook. Finance is still difficult to get, and sentiment in the residential property space is very negative. This primarily reflects the price outlook, which has fallen further in New South Wales and Victoria. Sentiment does tend to lead rather than follow prices, however, certainly over the past few years. We think the continued downturn in price sentiment reflects recent developments rather than indicating a deterioration in the outlook.”
ENTIRETY OF ARTICLE: Smart Property Investment