COVID-19 hits property industry sentiment

23 April 2020

There has been a rapid and steep decline in sentiment across the Australian property industry caused by the COVID-19 pandemic according to the ANZ / Property Council industry survey for the June 2020 quarter.

National industry confidence levels have plunged by 61 index points from the previous quarter to 62 index points for the June 2020 quarter – the lowest level in the history of the survey which started in 2011. A score of 100 on the index scale is considered neutral.

Two-thirds of survey respondents said COVID-19 was already impacting on their businesses, with 35 per cent reporting a serious impact. 87 per cent expected this impact to worsen in the next three months with over half anticipating a serious impact. 67 per cent of respondents said the pandemic was having a moderate impact on current project construction schedules at this stage, with 15 per cent reporting a serious impact. 

Significantly, national staffing level and forward work expectations have fallen into negative territory for the first time in the survey’s history. (The announcement of the JobKeeper wage subsidy to support employers to retain their workforces was made late in the survey period.)

“These are troubling findings given the importance of the property industry to the Australian economy,” said Ken Morrison, Chief Executive of the Property Council of Australia.

“Property is a big driver of employment and economic activity, and the plunge in expectations for these key drivers highlights the critical importance of government action that supports the industry now and into the future.

“No sector of the economy is being spared from the impact of COVID-19, but property is the nation’s biggest employer and contributes more than 13 per cent of GDP. This means the property industry needs to be front and centre for policy-makers as they manage and plan the economic and policy response to the pandemic.

“This includes the importance of keeping construction sites open now and stimulus measures to support businesses, as well the longer-run impacts from the pandemic that may play out for many months once the public health crisis has passed.

“It will be important for policy makers to monitor the impacts on rental income, development activity and capital markets on the property sector,” Mr Morrison said.

ANZ Senior Economist, Felicity Emmett commented: “After recovering through much of 2019, property sentiment has taken a sharp hit from the coronavirus and the shutdown measures put in place by federal and state governments to contain it. 

“Just as the lockdown measures have been broadly-based, the deterioration in sentiment has been equally widespread. Sentiment across the residential, office, industrial, retail and tourism sectors have all been sharply impacted. Not surprisingly, the tourism sector has been the hardest hit. 

“Across all sectors, price expectations have turned around sharply, employment prospects have deteriorated and the construction outlook has turned down. The construction sector is not subject to a shut-down at present, but the downturn in the outlook is concerning, and suggests that the impact of the virus may be more long lasting on the property sector. With long lags associated with construction approvals, commencements and completions, a quick rebound once the lockdown is eased seems unlikely.”

Key findings from the ANZ/Property Council Survey June 2020 Quarter:

The survey was based on 918 online responses from 16-31 March 2020. 

To view select ANZ/Property Council Survey historical data series in the Property Council’s Data Room, click here, http://research.propertycouncil.com.au/data-room/economy/property-industry

To find out more about the ANZ/Property Council Survey and our Supporting Sponsor RCP, click here, http://research.propertycouncil.com.au/research-and-data/anz-property-council-survey

 

--ENDS--

 

Source:  Property Council of Australia - www.propertycouncil.com.au

Contact:  N/A

External Links: 

http://research.propertycouncil.com.au/data-room/economy/property-industry

http://research.propertycouncil.com.au/research-and-data/anz-property-council-survey 

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