Coronavirus infecting property sentiment: ANZ

In the wake of the coronavirus outbreak and the associated shutdown of economic activity, sentiment towards residential property and all sectors of commercial property declined sharply, according to the ANZ.

In their June Quarter ANZ property council survey in answer to new questions, specially set for this survey, they found that expectations of a negative impact from the coronavirus were broadly based and similar across the states. Nationwide, virtually all respondents expect to be negatively impacted by the pandemic, with all states recording similar responses.

10% of businesses report that the impact is already so serious it is affecting their viability. A large majority of firms reported that the virus was already impacting current construction schedules. Firms expect the impact of the virus to be largest on the tourism sector. 

In the residential sector, price expectations have turned around sharply and a net 36% of respondents now expect house prices to decline over the next year.

Employment in the sector is also expected to decline, but the outlook for construction activity is more balanced. The outlook for the residential sector is negative across all states and territories. 

In commercial property, across all sectors and states sentiment declined sharply. Confidence in the tourism and retail sectors was the weakest, but sentiment also declined sharply in the office and industrial sectors.

ANZ Senior Economist Felicity Emmett said, "after recovering through much of 2019, property sentiment has taken a hit from the coronavirus and the shutdown measures put in place by the federal and state governments to contain it."

"Just as the lockdown measures have been broadly-based, the deterioration in sentiment has been equally widespread. Sentiment across the residential, office, industrial, retail and tourism sectors have all been sharply impacted."

"Not surprisingly, the tourism sector has been the hardest hit."

"Across all sectors, price expectations have turned around sharply, employment prospects have deteriorated and the construction outlook has turned down."

"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. With long lags associated with construction approvals, commencements and completions, a quick rebound once the lockdown is eased seems unlikely"