Property and construction, the sectors carrying the best hope for a soft transition from the resources boom, are a tad less bullish than three months ago.
The latest ANZ/Property Council Survey, which reflects the views of near 2000 industry players polled in the first weeks of December, revealed an industry more confident than most about the outlook for 2015.
Values have jumped, housing construction is at long-term highs, forward work books are strong and the sector, which employs about1.3 million Australians, is hiring.
But property sector confidence, like sentiment across the nation, is subsiding.
In commercial property, the underlying economy remains a drag on performance. In this survey the weakness showed in sharply lower expectations for national economic growth, and in a subdued outlook for capital growth in the office sector, which – outside Sydney and Melbourne –is negative.
In housing, the weakness showed in the expectation of cooling house price growth and, surprisingly, an outlook for less housing construction in the next 12 months.
The cooling in house price growth is actually good for the sector, removing some of the frenzy in Sydney and Melbourne, giving the Reserve Bank room to cut further on interest rates and reducing the likelihood of draconian macroprudential controls on investment buying.
“The governor of the Reserve Bank does not want a boom. He want activity to run for several years,” ANZ chief economist Warren Hogan said.
Property Council chief executive, Ken Morrison, says the sector is in for a good year. “But if it comes off a bit, it will not be the same in 2016.”
The strength of the upturn in property, combined with the weakness in the rest of the economy, and the threat of subsidence even in property, will underpin Morrison’s message to governments in the year to come.
“The positive results out of property should send a clear message to policymakers that it is time to make the sector a priority,” he said.
“Governments at a national and state level must urgently start putting in place the policies to facilitate further sustained growth in this critical sector. Outside of property, there is no other industry in a position to step up and drive economic growth the way we can – and are already.
“We will be campaigning hard this year to ensure that meaningful tax reform is finally achieved, key infrastructure is progressed and housing affordability is properly addressed.”
Mr Hogan said property and construction were a “key part” of the economy for the non-mining recovery.
“A positive outlook for property values and construction is critical to the near-term Australian economic outlook as non-mining business investment and household consumption reflect a sluggish transition to non-mining drivers of economic growth,” he said.
Mr Hogan acknowledged that the broader economy remains a drag on property, with the weak labour market to remain “a headwind” for housing.
The survey showed the strongest level yet of foreign buying of commercial property, with respondents estimating that offshore buyers accounted for 12 per cent of all sales in NSW and 8 per cent in Victoria and nationally.