Confidence is up across residential & commercial investment

CommercialFriday 9 June 2017

Confidence is at a two-year peak for residential and commercial property investment around Australia, with the most optimistic outlook since 2014. The ANZ/Property Council Survey consults over 1,600 property professionals, from developers to government through to agents, to assess industry construction and employment prospects across the industry. The survey’s latest results show that the confidence index is up three points from March at 135 for the June quarter, based on a neutral confidence base of 100. In particular, the residential, industrial and office sectors are expected to improve over the next quarter across the country.

Confidence in commercial sectors

Within Australia’s commercial sectors there are several areas indicating greater forward work schedules and higher staffing level requirements going into the next few months. Tourism and industrial sectors in particular are recording good outlooks, while retail is predicted to take more of a back seat. The NAB Commercial Property Survey recorded similar results for the first quarter of 2017, with a promising outlook for capital growth across CBD hotels, office and industrial property over the next one to two years and again, a more subdued response to retail. As for the residential sector, ANZ analysis reports that 49% of firms surveyed expect house prices will continue to rise over the next year, which is up from 35% one year ago.

NSW confidence is still the highest of all states

Although NSW saw a fall in the confidence index from 149 in March to 145 for the June 2017 quarter in the ANZ/Property Council Survey, the state is still seeing the highest levels of optimism of all states and territories. The industrial sector within NSW seems to be looking particularly strong, as are office investments throughout NSW and Victoria.

WA recorded a comeback from March results

Although property values are still looking weak, Western Australian confidence in property has appeared to make a comeback for the June 2017 quarter, with some of this boost likely coming from the change in state leadership in March. With a jump from 98 to 118 in the ANZ/Property Council Survey index, this is a significant rise that analysts believe may be in response to planned construction developments that aren’t tied to the uncertain mining industry in the state.

What does this mean for investors?

As always, decisions will depend on location, sector and wider conditions. Although lending conditions have tightened up considerably and many predict interest rate rises in the intermediate future, there is still a sense of optimism in many areas within the property industry. The May Budget should help to clarify the direction for many investors searching for promising residential or commercial property sales.

If you are looking at new opportunities for your portfolio, speak to your local advisory team at Burgess Rawson. Our commercial property management services and professional valuation services are backed by state-of-the-art town planning and real estate data to help you find the best value for your residential or commercial property investment.