Two property surveys released this week have shown marked differences in sentiment between the retail and residential property markets in Western Australia.
While the Australian Property Institute’s six-monthly property directions survey reveals the retail property market is gloomy and forecast to hit rock bottom in the next 12 months, the Property Council-ANZ Property Industry Confidence Survey shows confidence has lifted significantly in the past quarter.
In June the council’s index was at 17 points, up from -4 in the March quarter, a sharp turnaround for the residential sector.
Property Council of Australia WA executive director Joe Lenzo said low rental accommodation vacancy rates (1.6 per cent) were the main driver of confidence in residential property.
Overall, confidence in WA was up from 127 points in the March quarter to 144 in the June quarter compared to the national rate of 113 in the June quarter, up from 107 in the previous quarter.
“WA office (property) continues to outperform, with the strongest expectations for CBD office demand in Australia,” Mr Lenzo said.
“The WA index for the June quarter was 45, up from 37 in the previous quarter. The national index continues to languish at less than 5.
“Hotels, tourism and leisure capital growth expectations have shown a remarkable turnaround, recording an index reading of 15, up from -11 in the March quarter.”
When it comes to retail, the API’s survey found WA was faring well compared to the eastern seaboard but industry insiders expected the market would continue to struggle for at least another 12 months.
“If interest rates are cut we might get a change in confidence that will see things improve but otherwise I would expect retail to stay stagnant and maybe even decline further unless we see a shift elsewhere,” API WA president Dennis Volk said.
Confidence in the commercial property market outperforming equity markets in the short term has dropped from two thirds of respondents considering it likely or very likely, to 43 per cent likely.
About 30 per cent believe it is unlikely.
