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The latest ANZ-Australian Property Council survey was released today, containing a synopsis of views from more than 1,700 respondents ranging from owners and developers to real estate agents and property consultants, among others.

It’s an excellent report, canvassing not only what they think will happen in Australia’s housing market, but also for commercial and industrial property.

According to ANZ, the overall results point to waning confidence levels.

“The September quarter ANZ-Property Council survey shows that sentiment is cooling in the property sector,” said Daniel Gradwell and David Plank, members of ANZ’s economics team.

“Expectations of a cooling housing sector are in line with the regulation-induced slowdown evident in slower house price growth and weaker auction results in recent months. APRA’s crackdown on the investor segment has seen borrowing costs rise and the availability of finance tighten.

“As a result, firms are reporting a softer outlook for construction activity and prices over the next 12 months, which is in keeping with ANZ’s view.”

The chart below shows overall confidence levels from respondents across the sector. It shows that while sentiment dipped in all states and territories in the September quarter, it still remains higher than the levels of a year ago.

On the housing market specifically, Gradwell and Plank said that a variety of indicators point toward a weaker market going forward.

“Construction activity, capital values and the forward-work schedule are all expected to ease over the coming 12 months,” they said.

On the outlook for house prices, always an area of contention in this era of housing affordability debate, the survey found that only 37% of respondents expect house prices to rise over the next 12 months, down from 49% three months ago.

That was similar in the outlook for housing construction with only 31% expecting construction activity to rise, down from 38% in the previous survey.

While a majority of respondents expect levels to increase, with the exception of employment, all categories saw a decline on three months earlier.

Source: ANZ

Outside of housing, another interesting development in the survey was a sharp deterioration in the outlook for the retail commercial sector.

It fell sharply, an outcome that was perhaps not all that surprising given broader concerns about soft trading conditions and an increasingly competitive marketplace with the entrance of foreign giants such as Amazon.

“All retail indicators softened in the September survey,” said Gradwell and Plank.

“Both capital value and construction activity expectations fell to the lowest levels on record, reflecting the fact that the industry faces a number of challenges.”

ANZ noted that only a net 10% of respondents said that retail property values would increase in the year ahead, down significantly from a net 44% a year ago.

And expectation that house price growth will weaken, something that had previously supported household wealth and hence spending, was cited as one factor behind the slump in sentiment.

While views towards the retail sector were glum, the exact opposite was reported on the outlook for the commercial office market.

“Strong employment growth in white-collar office jobs appears to be supporting sentiment, such that offices are now the most optimistic segment for the first time on record,” said Gradwell and Plank.

They also said that confidence in industrial property also nudged higher having hit a record high previously, helped by a raft of infrastructure projects currently being built across Australia’s eastern seaboard.

Here’s a couple of interesting tables showing the breakdown in responses in the September quarter survey.

The first shows the net balance of views on the outlook for prices for property prices. A positive figure indicates a majority think they’ll increase while a negative figure suggests the majority think they’ll fall.

Source: ANZ

The second is the proportion of sales to foreign investors over the past three months, breaking it down by type sector and location.

Source: ANZ

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