Australian property market confidence highest in resource-rich areas: PCA-ANZ survey

Property market participants have more confidence in and growth expectations for Australia’s resource-rich states and territories, according to latest Property Council of Australia (PCA)-ANZ Property Industry Confidence Survey.

The PCA-ANZ property industry confidence index increased at the national level from 104 in September to 107 in December (neutral being 100), but “there was increasing divergence in property industry confidence across the states”. 

“Resource-sector states (WA, Queensland, Northern Territory, South Australia) are indicating the greatest confidence, while Victoria, ACT and Tasmania are indicating the lowest confidence,” says ANZ and the PCA.

Source: PCA-ANZ

The Northern Territory registered the biggest jump in confidence over the last quarter of 2011 and has the highest rating on the confidence index, followed by Western Australian and Queensland, which both recorded strong gains. 

There was also a small lift in South Australia, where a number of big projects are in the pipeline. 

On the other hand, confidence fell below the 100 mark in Victoria, Tasmania and the ACT, which do not have strong ties to the resources boom. 

Reflecting a weak property market and poor job and tourism prospects, Tasmania property participants have the gloomiest outlook of all states and territories. 

While confidence in the property market in NSW declined over December, it remains above the neutral 100 mark. 

Survey respondents expect residential prices to fall further in the March quarter in all states and territories bar the Northern Territory, despite back-to-back November and December rate cuts and an increasing likelihood that the RBA will cut rates further in early 2012. 

The outlook for residential property values improved strongly in Western Australia and Queensland though remained below the 100 mark, and there were also gains in NSW.

Confidence in the property market fell furthest in Victoria over the quarter, with 61% of industry respondents expecting residential prices to weaken in the March quarter compared with 54% in the previous quarter. 

“The data indicate the significant negative impact of ongoing economic and global financial market uncertainty that is weighing on housing market confidence and expectations,” says ANZ and the PCA. 

ANZ expects house prices to ease further into 2012 but maintains a “cautiously optimistic medium-term house price view supported by a robust economic outlook, limited forced selling, improved affordability and an ongoing tightening of the Australian housing demand/supply balance”. 

The survey also revealed that the property industry expects the RBA to cut interest rates further in the March quarter of 2012.