Confidence in Australia’s property market is at its lowest point in more than three years as the aftermath the federal election and restrictive taxation arrangements weigh heavily on the sector.
Released last week, the June edition of the
ANZ/Property Council Survey has revealed consumer and industry sentiment around Australian real estate is at its lowest point since December 2013. The confidence index, which tracks current conditions as well as future predictions, came in at 128 – a score of 100 on the index considered to be neutral. However, while that is still a positive reading, it has dipped three points since the previous survey.
“The uncertainty created by the longest election campaign in half a century, and recent state government decisions to increase property taxes are taking a toll,” Ken Morrison, chief executive of the Property Council of Australia said.
The Victorian, New South Wales and Queensland state governments all recently announced higher taxes – including stamp duty and land tax hikes – for foreign property investors, as a part of their state budgets.
The survey also shows national sentiment has cooled around the prospects of future capital growth in the residential real estate sector, while the strength of the residential construction industry is also likely to fall away.
“Nationwide, expectation for capital growth in residential property are neutral. However, the state by state differences are pronounced,” Morrison said.
“Expectations are positive in all jurisdictions except Western Australia. However, it should be noted that we are witnessing significant falls in expectations in Victoria and Queensland.
“While all sectors are reporting net positive expectations for construction, there is concern about the trend in residential construction. In residential construction, we have witnessed a downward shift in sentiment of 36.5 points over the past 12 months.”
The drop in confidence also comes despite respondents in all jurisdictions reporting that they believe interest rates are yet to hit the bottom of their current cycle.
“All jurisdictions recorded expectations of lower interest rates in the coming 12 months,” Morrison said.
“However, the sector is feeling the impact of a tightening in lending conditions by the banks and all states are reporting strong falls in expectations of debt finance, with the exception of SA.”
Housing affordability still remains a key concern for many Australians, with almost one in five (17%) reporting that affordable housing is the most critical issue facing the Federal Government, according to the survey.
Similarly, 19% reported tax reform as a critical issue. Negative gearing was a major election talking point, with the Coalition vowing to keep the tax incentive unchanged. The Labor Party argued that negative gearing should be restricted to newly built investment properties.
