According to new research from the Property Council of Australia and ANZ, the NSW and Victorian property markets have been ‘stranded by declining confidence, while resource-driven states are increasingly positive’. The latest Property Council-ANZ Property Industry Confidence Survey shows positive sentiment grew in the Northern Territory, Western Australia, Queensland and South Australia – all states with a strong resources base.
However, according to the survey, ‘sentiment fell in New South Wales and Victoria – the states with the largest property markets – as well as the ACT and Tasmania. The survey polled 2800 property industry professionals across all Australian states and territories in December 2011’.
It found confidence across Australia rose slightly in the three months to December, from 104 to 107 on the survey index. A value of 100 represents a neutral position on the index. Since September, the divergence in confidence between the top region (Northern Territory) and the lowest (Tasmania ) has almost doubled.
The survery results reveal that office market fundamentals have improved markedly, led by solid growth in tenant demand. ‘Net absorption has been particularly strong in Perth and Brisbane and vacancies are now well below trend in all capital cities except Canberra.
‘Weakening office building approvals foreshadow limited capacity expansion in the near term and medium-term supply additions will be constrained by subdued developer sentiment and tightened credit conditions. However, despite a strong fundamental backdrop, investor sentiment remains cautious.
‘Soft investor sentiment is reflected in capitalisation rates that remain near their post GFC highs and solid discounts to net tangible assets across the REIT market. However, given the turmoil in global financial markets, Australia has retained a relative safe haven status and the commercial property sector continues to attract significant offshore capital’.
Research shows ‘the retail segment is entering a period of vulnerability with a moderate increase in the unemployment rate and the threat of a new era of online shopping. The shift in consumer behaviour towards online retailing has accelerated recently, and will provide a key headwind to traditional ‘bricks and mortar’ retail property. The elevated $A has acted to accelerate the migration of consumers towards online retailing’.
‘ANZ anticipates that retailers will continue to ‘build out’ their online presence and distribution channels. Despite current headwinds in the retail sector, the retail property market should remain resilient, underpinned by sound fundamentals, robust household income growth and a sound domestic economy’.
Tourist accommodation ‘continues to face headwinds, due to ongoing strength of the $A and uncertain global economic conditions. There are contrasting trends however in the performance of regions within states, with capital cities generally displaying more robust performance due to capacity constraints and strong demand for business travel.
‘Encouragingly, business travel should continue to support the accommodation sector moving forward, with the Tourism Forecasting Committee estimating that domestic visitor business nights will rise by a little over 3.0% over 2012’.