The softening property market is likely to put pressure on the Australian economy in 2016, the chief economist of a major bank has warned.
According to the latest ANZ/Property Council Survey
, overall property industry confidence post a modest increase in the last quarter of 2015, edging up one point to 131 in the last quarter of 2015.
chief economist, Warren Hogan, said a number of factors that buoyed the property market and drove Australia’s growth through 2015 will wane in 2016.
“We expect that the housing sector’s contribution to growth is set to ease, through softer construction activity and a reduced ‘wealth effect’ from weaker price growth,” Hogan said.
“The housing market has clearly eased through the second half of 2015. Triggered by the impact of tighter mortgage lending regulation for investors and higher mortgage lending rates, housing market sentiment has weakened sharply.”
On the other hand, Hogan says commercial construction is strengthening.
“The pipeline of commercial property construction, however is gradually growing,” Hogan said.
“Capital growth has strengthened across most commercial property sectors, with the expectations of capital growth strongest in retail and tourist accommodation property.”
According to the survey, leasing conditions across commercial property sectors have broadly improved in the past year which has driven stronger tenant demand.