Confidence across the NSW property and construction sector has taken its sharpest hit in years, according to the latest Procore/Property Council Industry Sentiment Survey.
The state's index fell from 109 to 89 points in the June quarter — dropping below the neutral 100 mark and now sitting under the national reading of 92. It was the steepest quarterly decline of any state or territory surveyed.
Property Council NSW executive director Katie Stevenson (pictured) said the scale of the shift stood out.
"NSW confidence has moved from positive territory to below neutral in a single quarter," Stevenson said, adding that the survey — run between 1 and 17 June, ahead of the NSW budget — captured a period when businesses were already contending with elevated rate expectations and tightening finance conditions.
By comparison, Queensland and South Australia held firm at 120, and Western Australia at 112, while Victoria lagged badly at around 67. Staffing intentions, work pipelines and capital growth expectations all softened across NSW, with residential expectations weakening in every market surveyed.
Stevenson said the underlying issue isn't a lack of buyer or occupier demand, but the economics of getting projects across the line.
"Demand is still there, but the conditions required to turn that demand into delivery remain under pressure," she said.
That pressure is compounding, with survey respondents also flagging debt finance availability as a growing constraint on project feasibility.
Last week's NSW budget offered some targeted relief for build-to-rent and retirement living financing, but Stevenson doesn't expect it to shift sentiment quickly.
The incoming Development Coordination Authority, starting 1 July, was flagged as a useful step on planning delays, though she cautioned it won't be enough alone: "Streamlining coordination is a positive step, but unless cost pressures and financing constraints are also addressed, it won't be enough on its own to shift sentiment in the near term."
NSW is not yet building or approving homes at the pace required to meet its National Housing Accord commitment. NSW is on track to deliver only around 258,000 of its 376,000-home Accord target — a 31% shortfall. Closing that gap, Stevenson said, will require NSW's completion rate to roughly double from current levels, which is why feasibility, planning coordination and cost pressures matter so much.
For brokers, weaker feasibility and financing appetite among developers points to slower new-supply pipelines feeding through over the medium term — a factor worth flagging in conversations with property investors and clients tracking construction lending conditions.
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