Growing concerns about national economic growth are weighing on sentiment in the property industry, the Property Council of Australia says.

The latest ANZ/Property Council Survey for the December 2019 quarter reveals sentiment has fallen by 10 index points from the previous quarter to 118, which is below the survey's historical average of 126 from its inception in 2011.

Property Council of Australia Chief Executive Ken Morrison said the survey underscored the importance of some clear signals from policy-makers on measures which would stimulate investment and spending, while also underpinning confidence for the future.

ANZ/Property Council Survey - At a glance:

• The national confidence index fell by 10 index points for the quarter to 118 points; it’s second-largest quarterly decline since the survey’s inception and below the historical average of 126.
• Confidence declined across all markets and most significantly in South Australia which fell by 43 index points, the biggest quarterly fall of any state or territory in the survey’s history. SA has gone from the highest confidence rating in the country to the lowest, in just one quarter.
• Respondents from all states and territories expect another cut to interest rates in the next 12 months and maintained expectations around debt finance becoming more accessible over the next 12 months (except SA).

"With the property industry accounting for 13 per cent of GDP and housing construction falling sharply, this is a significant shift," he said.

“When federal, state and territory treasurers meet next week, they should put reforms which will stimulate investment in the property sector at the top of their list, both to boost economic activity as well as ensure there is a strong and stable supply of housing over coming months and years.

“While this survey shows a turnaround in expectations for house prices, sharply falling housing construction will mean that the market will be undersupplying demand again in 2020."

The aftermath of May's federal election coincided with a sharp turnaround in residential property sentiment, with interest rate cuts, and the removal of the serviceability buffer on home loans contributing to a rise in house prices across the two major markets.

ANZ Senior Economist, Felicity Emmett said the continued improvement in credit availability suggested that construction activity, and not just prices, should begin to pick up in coming months. 

"Prices are clearly benefitting from the combination of some pent-up demand and low levels of stock, but we continue to think that the current period of strong monthly prices gains will be relatively short-lived, and that prices will moderate in coming months as more supply comes on stream and credit policies remain relatively constrained."

Click here for more information about the  ANZ/Property Council Survey.

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