Confidence across Australia’s property and construction industry has recorded its sharpest quarterly fall since 2022, raising fresh concerns about the nation’s housing pipeline and long-term investment appetite.
The latest Procore/Property Council Industry Sentiment Survey shows national confidence dropped from about 123 to 104 in the March quarter, pointing to a broad deterioration in expectations around development, construction, and investment activity.
The survey, run from 9 to 27 March, captured market views at a time when construction and labour costs remained elevated and supply chain issues persisted, making it harder to move approved projects into active construction and through to completion.
Against that backdrop, the sentiment shift comes as Federal Treasurer Jim Chalmers prepares to hand down what is shaping up to be one of Australia’s most consequential federal budgets, adding another layer of fiscal uncertainty for housing policy.
Property Council chief executive Mike Zorbas (pictured) warned that the size of the shift in sentiment should be taken seriously given the scale of Australia’s housing supply task.
“It would be a mistake to underplay such a sharp drop,” Zorbas said in a media release.
Respondents reported weaker expectations across the board, with economic management now the second-highest concern for the industry. Forward work schedules were down in every state and territory, and confidence around construction activity eased across all major asset classes.
Housing capital growth expectations also fell to their lowest level since 2020, signalling softer investment appetite at a time when investors already face higher borrowing costs and tighter serviceability settings.
Zorbas noted that “whether industrial, commercial, or living sector, projects need both investor and consumer confidence to get them out of the ground.”
“With costs high and confidence fragile, even relatively small increases in uncertainty can delay or stall projects before construction begins,” he said.
The survey highlights the close link between investment confidence and housing delivery, with investors funding roughly four in every 10 new homes. When potential changes to tax or housing policy raise uncertainty or reduce investor returns, more projects fail to stack up and fewer new dwellings proceed.
That risk is front of mind as proposed changes to the capital gains tax discount and negative gearing could push many investors to the sidelines, with a recent survey finding 39% would step back or sell if the 50% CGT discount were reduced and another 22% would reconsider if negative gearing were capped to one property – a combined 61% who may pull back under the mooted reforms.
“Our cities are where housing, jobs, and productivity meet and must be kept in balance,” Zorbas said.
The report argues that stable, pro-investment policy settings, along with reforms to lift productivity and delivery, will be critical to converting approvals into actual dwellings across the pipeline. That in turn would support a more sustainable pipeline for lenders and brokers.
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