The coronavirus pandemic has continued to stifle the property industry with investor sentiment sinking to levels last seen just after the global financial crisis a decade ago, according to the latest ANZ-Property Council Survey.
The survey, based on the sentiment of industry professionals in the last two weeks of March, saw confidence fall to record lows—plunging from 123 index points to 62 for the quarter. A score of 100 on the index scale is considered neutral.
Two-thirds of survey respondents said the crisis was already impacting on their businesses, with 35 per cent reporting a serious impact and 9 out of 10 respondents expecting economic conditions to worsen over the next three months.
Sentiment across the residential, office, industrial and retail have all been sharply impacted yet 75 per cent of respondents believe the accommodation sector will continue to be the most severely impacted.
Sentiment for Australian hotel capital growth expectations decreased by 91 index points to a record low of -81 index points with construction activity within the accommodation sector sitting at -20 index points, closely followed by the retail sector at -19 index points.
Currently the limited retail development taking place is skewed toward supermarket-anchored neighbourhood centres, with the latest virus-related retail boost being spurred on by consumer panic buying.
Residential capital growth sentiment decreasing from 35 to -23 index points while office capital growth expectations fell 54 index points to a record low of -36 index points over the quarter.
Despite decreasing sentiment, the industrial sector and the retirement living sector remain in positive territory recording 7 and 8 index points respectively.
Industrial property, seen as a more defensive play aligned with the growing reliance on ecommerce and last-mile delivery, was seen as the sector least susceptible to the impacts of the virus with 1 per cent of respondents nothing it would be severely impacted.
Despite numerous stimulus measures enacted by the federal government, outlooks for new staffing and workbooks over the next 12 months dropped to their lowest since the quarterly survey began in late 2011.
Property Council of Australia chief executive Ken Morrison said the results were troubling given the importance of the property industry to the Australian economy.
“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.”
Despite uncertainty around the sector, construction has pressed ahead with sites across the country adhering to social distancing measures, by staggering shifts, splitting up break times and locations, in an attempt to try to keep projects on schedule.
While two-thirds of respondents said their construction schedules had experienced a “moderate” but manageable impact, possibly due to supply chain issues, the proportion reporting a ”serious” impact was at this point 15 per cent.
ANZ senior economist Felicity Emmett said that across all sectors, price expectations contracted sharply in hand with deteriorating employment prospects, causing a turn down in construction outlook.
“With long lags associated with construction approvals, commencements and completions, a quick rebound once the lockdown is eased seems unlikely,” Emmett said.
“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.”