Property Council Australia
AS the nation gets ready to head to the polls, the latest Procore/Property Council Survey has revealed an increase in optimism among the property industry but a desire to see more done to boost housing supply.
The survey of 1170 Property Council members found industry confidence rose over the March quarter, with the Confidence Index rising nine points to 125.
The Confidence Index gauges industry sentiment, with a neutral score of 100. Higher scores show optimism, while lower scores indicate pessimism.
Other indexes, like those for housing construction and residential price growth, use a neutral score of 0.
Respondents are keen for the next government to tackle housing supply issues, with 40 per cent rating housing supply and affordability as the key issue for the Federal Government. This was followed by tax reform (17 per cent) and cities and infrastructure delivery (15 per cent).
The score for housing construction expectations climbed to 30.3 on the index, marking the highest level since March 2022 and surpassing the long-term average.
Residential house price growth expectations remain elevated, with an index score of 42.7, significantly exceeding the long-term average of 14.6.
Property Council Chief Executive Mike Zorbas said confidence in the domestic industry was rising as economic growth expectations recovered and the industry anticipated more interest rate cuts.
“The Procore/Property Council sentiment survey shows that in the run-up to ‘Liberation Day’ the industry has been growing in confidence, especially following the RBA’s recent interest rate cut,” Mr Zorbas said.
“Recent global events are a timely reminder of the fundamentals.
“Investors are still screening for the most stable risk-adjusted returns. Australia retains stabilising institutional checks and balances, good demographics and raw materials aplenty.”
At the same time, property was a capital-intensive industry, Mr Zorbas said.
“Now more than ever, we need to use other peoples’ money to build our cities,” he said.
“We need global institutional capital to secure the next wave of housing, offices, industrial sheds and community infrastructure.
“That means streamlining investment pathways, including FIRB, APRA and the ACCC and ditching the student political theatre of state government taxes on foreign institutional investment.
“In the shadow of a Federal Election, the property industry also expects to see whoever forms government work with state and local governments to tackle supply issues with renewed vigour.”
At the state level, 36 per cent of respondents identified housing and affordability as the primary issue for state governments, followed by property taxes and charges at 24 per cent.
“We need to simplify regulations, expand the construction workforce and eliminate investment-deterring taxes to boost housing supply nationwide,” Mr Zorbas said.
“The majority of respondents are factoring in more domestic interest rate changes over the next 12 months, and this will intensify following the global trade reset.”
For the first time since December 2019, just before the onset of the Covid-19 pandemic, office capital growth expectations are positive.
Respondents in Victoria and the Australian Capital Territory were the only ones expecting office capital values to decline.
Mr Zorbas said the growth of premium and A-grade office spaces, particularly in Sydney, along with a tight office market in Queensland ahead of the Olympics, was contributing to renewed confidence.
“It is pleasing to see positive confidence in the sector for the first time since before the pandemic,” he said. “The office market is starting to point in the right direction, especially for premium office towers in prime locations, as tenants increasingly prioritise high-quality, high-amenity spaces.
“The resurgence of investor confidence seen in 2024 is continuing into 2025 as market fundamentals point towards growth.”
Chris Skelton, General Manager, APAC, Procore said, “While optimism in Australia’s property industry is growing, the fact remains that our country needs more housing to keep up with rising societal trends.
“At Procore, we believe timely access to data-driven insights drives efficiency, mitigates risks in construction, and ultimately leads to more successful project outcomes and a stronger property industry.”
