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NSW property industry loses crown to Victoria as confidence drops

Gloomy outlook: Surveyed members of the NSW property industry expect further price falls.Gloomy outlook: Surveyed members of the NSW property industry expect further price falls. Photo: Dallas Kilponen

The NSW property industry appears to be losing its nerve, with confidence in the market deteriorating, a new survey shows.

Victoria now has the most bullish outlook, with members of the industry expecting further price growth and strong construction activity. 

It’s the first time in four years NSW hasn’t topped the ANZ/Property Council’s quarterly confidence survey of more than 1100 industry experts.

Melbourne ranked 10th out of 100 in the Smart Cities Index.Melbourne ranked 10th out of 100 in the Smart Cities Index. Photo: Josie Withers

In fact, NSW confidence levels now match those of Western Australia, which Property Council of Australia chief executive Ken Morrison said had experienced a “remarkable” increase. 

“NSW was the most confident state for 15 consecutive quarters, but it has now been bested by Victoria,” he said.

“Confidence levels increased across all jurisdictions over the year, except in NSW and the ACT.” 

ANZ senior economist Daniel Gradwell said with Sydney price growth easing, it was no surprise confidence in NSW had deteriorated.

“Confidence in NSW had been sitting at such a high level for such a long time, that you would expect to see it pull back,” he said. “It’s mirroring what’s been happening with property prices in the past couple of months.”

NSW is the only state where industry members are expecting further price drops for residential property over the next 12 months.

Victoria was more bullish, with respondents expecting price growth on the back of higher levels of foreign-buyer activity, which made up more than 20 per cent of total residential sales over the last quarter. 

Mr Gradwell said Sydney’s “massive price growth” in recent years had resulted in international buyers turning to Melbourne.

Melbourne’s developers are racing to meet the demand, with figures released by the Australian Bureau of Statistics on Tuesday showing a massive jump in new building approvals in November. Victoria saw a 37.9 per cent increase in new dwellings approvals over the month.

Mr Gradwell said the most encouraging finding from the survey, was the surge in confidence in Western Australia. 

“Western Australia was once again the biggest mover in the quarter, with sentiment leaping to the strongest level since 2013,” he said. “This isn’t a one-off result … it has steadily increased over the past 12 months.”

Market confidence for the quarter was lowest in Queensland, however Mr Gradwell pointed out that it had been improving for the four previous consecutive quarters.

Ranking just above Queensland, was the Australian Capital Territory and South Australia. While the property industries in both areas expected to see further price growth for residential properties, they had weaker expectations for their commercial property market.