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Housing supply has been forecast to increase in the next 12 months – but so have interest rates.
The latest Property Industry Confidence Survey from ANZ and the Property Council of Australia found there is now an “overwhelming expectation” of higher interest rates in the next year.
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This marks a “significant turnaround” from last year when most respondents expected rates to fall.
The quarterly index also reported a drop in confidence from a record 140 points to 132.
Property Council of Australia chief executive Peter Verwer said the property and construction industry was cautiously awaiting the Abbott government’s first Budget.
Mr Verwer said property investors needed certainty if they were to continue to drive economic growth.
“Since June last year, the property industry staffing levels have grown significantly. And the good news is the industry expects staffing levels to continue to rise over the next 12 months,” he said.
ANZ chief economist Warren Hogan said rising house prices had triggered an increase in household spending.
“However, this strength is unlikely to be sustained, with consumer confidence weighed down by job security concerns and slowing wages growth,” he said.
“Hence, despite a solid recovery in the property sector, ANZ expects that Australia will continue to experience below-trend growth in the near-term.
“For monetary policy, this suggests that we are in for an extended period of low interest rates before the RBA likely enters a period of rate hikes in 2015, with the aim of returning monetary policy closer to a neutral setting.”
