This article is from the Australian Property Journal archive
THE property development industry believes they are leading Australia’s economic recovery, according to St.George Bank Business Outlook survey.
The survey revealed 75% of business leaders in the property development sector said their industry is leading other industries in the nation’s recovery, well ahead of the construction industry (63%), the primary industries and infrastructure sectors (58%) and finance and insurance sector (58%).
St.George Bank national head of property finance Peter Chapman said property development business owners (82%) are also above the national average (75% nation) to believe recovery is underway. And the property development sector (90%) is also amongst the most likely to believe different sectors are recovering at different speeds.
Chapman said although businesses are forecasting modest growth, revenue to grow by 8.3% over the 2010/2011 financial year, which is below the average year-on-year long-term growth of 9.0%. The property development sector is forecasting an average growth in revenue of 13.2%.
This is ahead of the construction sector’s forecast revenue growth of 8%, 8.1% in retail trade and 8.6% in the finance and insurance sector.
However, the finance and insurance sector were most optimistic for the financial year ahead (79% better), professional and business services (79% better) and education, cultural and personal services (78% better) industries. Business owners in property development were more subdued with 59% expecting a better 2010/11 financial year.
Chapman said businesses are beginning to feel the lag effect of the downturn as Government stimulus and other interventions dry up.
“Essentially, when you boost demand artificially then the following year you could see a lull in demand as the economy adjusts back to underlying conditions. As the Government stimulus fades, and interest rates rise, some businesses may feel they are experiencing softer demand than they might have expected given the recovering economy,” he added.
But despite the uncertainty in employment linked to the global financial crisis, seven in ten (69%) businesses believe there is currently a shortage of quality candidates in their industry.
Three in four (75%) business owners in the property development sector indicated there was a shortage of quality candidates in their industry, above the national average of 69%. Half (53%) of business owners in the sector also noted that as more employment opportunities became available they expected current staff to leave, below the national average of 56%.
Staff in property development are considered to be the most realistic in their wage expectations (91% realistic), well above the average indicated by business owners across all industries (69% realistic).
“The recovery is here, but for some, it is more equal than others
“There is no doubt the past year has had a significant impact on businesses and the way they are operating both now and in the future. Australia’s strong immigration numbers and shortage of quality housing in the capital cities should continue to drive growth in demand for jobs in this sector.
“However, it may be a bumpy ride and caution is warranted until the early signs of this improvement develop into a sustained upward trend,” Chapman concluded.
Australian Property Journal
