Housing construction the hope amid gloomy outlook

Just over 50 per cent of businesses expect things to improve in the near term, although the extended Melbourne lockdown has seen that decline from 60 per cent in the previous survey.

The survey of 857 respondents was taken across two weeks in mid-September before the federal budget was handed down that included $98 billion in new measures designed to return the economy to health.

Overall, the confidence index, which rates a neutral outlook at 100, has nudged up to 82 points from 76 points in the previous quarter. The historical average is 123.

The December quarter result followed a 14 index point improvement in the September quarter after confidence levels dipped to their lowest level in the survey’s history in the June 2020 quarter.

“We are clearly not out of the woods, for the economy and the property sector,” ANZ senior economist Felicity Emmett told The Australian Financial Review.

“The level of sentiment shows that. The budget will certainly help, there are lots of incentives for businesses to spend and tax relief for households as well.

“The outlook is still, for property and the broader economy, very challenging. It is very likely that further stimulus for the economy and probably for property is going to be required over coming months.”

The economic fallout from the pandemic is a big contributor to the negative sentiment. Expectations for economic growth have picked up a a little since the previous survey in July, but a net balance of 60 per cent of respondents expect the economy to worsen over the next 12 months. Expectations are most negative in Victoria, Queensland and NSW.

More respondents are worried about the impact of the COVID-19 disruption on the shopping centres and office tower sectors than they were three months ago. Nevertheless, despite some moderation since the September quarter, the level of concern remains the worst for hotels, tourism and leisure.

Amid that general gloom though, expectations for housing construction shine a little brighter. Some 61 per cent of respondents operating in the residential sector expect the federal government’s HomeBuilder program will have a positive impact on their business, For developers specifically, that expectation of a positive impact is at 75 per cent, up from 70 per cent in the previous survey.

Property Council of Australia chief executive Ken Morrison described HomeBuilder as the “pop star” of the government’s various economic stimulus measures which was delivering value for money.