Property industry stakeholders are increasingly optimistic about the market outlook amid the rapid recovery in dwelling values, according to new research.
According to the latest ANZ/Property Council Survey of 953 property industry stakeholders, which gauged market expectations for the upcoming March quarter, expected home value increases have helped boost overall confidence among respondents.
The survey reported that national property industry confidence levels increased by five index points from the previous survey, from 118 to 123 index points – creeping above the 2019 average of 121 index points.
The improvement was spurred by a rise in sentiment regarding residential property prices, which increased from 28.2 index points to 48.2 index points.
Sentiment towards residential construction activity also improved among respondents, with the index entering positive territory for the first time in over a year and a half (-1.5 to 19.7).
According to the survey, industry stakeholders also expect debt finance availability to improve in the March quarter, with the index rising from 10.7 index points to 14.3.
Reflecting on the survey results, Property Council CEO Ken Morrison said that while the rise in sentiment points to an improvement in housing market conditions, expectations of continued growth in property prices could pose a challenge to policymakers.
“Housing construction is one of the big engines of the Australian economy, so it’s encouraging news that industry sentiment has strengthened, but it also heralds a renewed challenge for policymakers on housing affordability,” he said.
“Strong house prices help underpin confidence and activity, but without matching housing supply, this can lead to runaway price increases and real housing affordability pressure.
“Coming off the back of a sustained drop in new housing approvals and construction starts, we must be vigilant to ensure housing supply keeps up with demand, including population growth, as the residential market reboots.”
Mr Morrison encouraged policymakers to get on the “front foot” and enact reforms to boost housing supply through “better planning and infrastructure delivery”.
“It will be important for all levels of government to keep their focus on these challenges in the months ahead, on top of the huge job of helping our bushfire-affected communities recover and rebuild,” the Property Council CEO added.
However, in her analysis of the research, ANZ Research senior economist Felicity Emmett observed that she expects strong monthly price gains to moderate over the coming months as the pipeline of construction activity translates to an increase in supply.
“Prices are benefiting from a combination of pent-up demand and low stock levels, but we think that the current strong monthly price gains will moderate in 2020 as more supply comes on stream and credit policies stay relatively constrained,” Ms Emmett stated.