The Property Council has described the impact the Olympic Dam Expansion (ODX) delay has had on property industry confidence as 'diabolical', with new research showing sector confidence dropping to the lowest level of any mainland state.
Property Council of Australia (SA Division) Executive Director Nathan Paine says the first Property Council-ANZ Property Industry Confidence Survey conducted since BHP Billiton announced the delay of the ODX project revealed the deferral was the biggest single reason for the dramatic drop in local confidence.
The survey polled more than 3500 professionals from the property and construction sector in all states and territories for their forward-looking views.
The confidence index decreased to 92 for the December quarter, a decline from 98 in the September quarter.
"The Property Industry Confidence Index for SA plummeted six points since the last survey, the second consecutive drop in confidence, accelerating a steep decline that started when speculation first emerged about the ODX project," Mr Paine says
"This is diabolical news for an industry that employs one in 10 South Australians and is the largest contributor to the state's economy."
"It demonstrates that beneath all the talk of 'big ticket' catalyst projects there's deep concern about underlying economic conditions, predicated on the absence of demand in the pipeline," he added.
According to the report, almost half of South Australia's respondents said state economic growth would soften over the next 12 months, and more than 60 percent said domestic economic conditions were the single biggest influence in their business decision-making.
ANZ Head of Property Research, Paul Braddick, says South Australian expectations for the residential property market are being weighed down by weak sentiment and an uncertain state economic outlook. However, the survey result was also driven by a negative outlook for commercial property.
"With the exception of retirement property, the net balance of South Australian respondents expect capital values in all other commercial property sectors to be lower in the next year," Mr Braddick says.
"Cancellations and delays of a number of large uncommitted mining and energy projects, including the proposed Olympic Dam expansion and the Clinton (coal-biomass-to-liquid) Project, have weighed on general business confidence and housing market confidence in South Australia, particularly for the regions and sectors exposed directly to the mining and energy industries."
Mr Paine says the South Australian Government's Housing Construction Grants announced earlier this week would help prevent "a negative feedback loop" leading to more economic destruction.
"This initiative is a critical next step in bridging the sentiment gap that has seen home buyers and consumers sitting on their wallets despite improving housing market indicators," he says.
"But we still need a plan for longer-term structural reform that shores up demand and growth, otherwise the negative feedback loop will restart and South Australians will begin to lose their jobs."
