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Property drives first phase of the non-mining recovery

Property drives first phase of the non-mining recovery

Confidence across the property industry remains at near record-high levels, highlighting the critical role construction is playing in leading the recovery in the non-mining economy.

According to the latest Property Council of Australia – ANZ Property Confidence Index, confidence across the residential and non-residential property sectors remains more positive than broader business confidence and in stark contrast to recent weakness in consumer confidence.

ANZ Chief Economist Warren Hogan believes this is the first phase of the non-mining recovery.

“We expect construction activity to take up some of the slack being generated by the downturn in mining and energy investment,” says Hogan.

“We’re seeing good activity levels in residential property, good construction across the board in the property sector and we should start to get some good jobs growth out of this industry.

 “Phase two would be a broadening of non-mining business investment and job creation beyond construction.”

The survey also reflects strong foreign investor demand for Australian housing, particularly in Sydney and Melbourne.

“This is the first time we’ve asked the question and this data gives us a new insight,” says Hogan. “It confirms offshore participation is quite prominent and suggests 20-25 per cent of sales are going offshore – which is what the industry has been saying – and this is concentrated in Sydney and Melbourne.”

Hogan says the survey reveals some interest in other state capitals but well below Sydney and Melbourne. He argues foreign investment would explain why the housing market is doing so well, yet housing credit growth is still quite moderate.

“Offshore buyers are not borrowing domestically,” he says.

Beyond this theme the survey shows it’s not only the residential property sector doing well in terms of sales, auction clearance rates, construction.

“The commercial sector is doing well – it’s pretty broad based,” according to Hogan.

Victoria Kanevsky - ANZ Media Relations Advisor

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The views and opinions expressed in this communication are those of the author and may not necessarily state or reflect those of ANZ.

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