The survey of Property Council of Australia members found industry confidence rose over the December quarter, with the Confidence Index rising eight points to 116. A score of 100 on the confidence index is considered neutral.
For only the fourth time since 2011, respondents across every asset class - from housing and retirement villages to offices and industrial assets – are expecting construction activity levels to be below long-running historical averages.
Housing construction expectations are two points below the historical average, while price growth expectations are 21 points above. National economic growth expectations are in the negative, with a score of -6 on the index, with zero being a neutral score.
Nearly 40 per cent of respondents see housing supply and affordability as the top federal issue, followed by economic management at 19 per cent. On a state level, 43 per cent prioritise it for state governments, followed by property taxes and charges at 23 per cent.
Property Council Chief Executive Mike Zorbas said the industry's expectation of constructing fewer homes over the next year highlights the challenges ahead.
"High barriers to construction, high input costs and low market capacity are all showing up in weak construction expectations," Mr Zorbas said.
"Utility delays, planning duplications between levels of government and state property taxes continue to drag on housing supply and add to the cost of new homes.
"With the federal election nearing, all parties must recognise that supply is first, second and third in solving the housing crisis. All levels of government must tailor policies to encourage greater investment in apartment, greenfield, purpose-built student accommodation and retirement village construction in addition to social housing to meet our ambitious national target of 1.2 million new homes by 2029," he said.
Confidence levels in Victoria remain negative despite rising by four points to sit at 95 on the confidence index.
New South Wales rose 13 points to 120, Queensland also climbed 13 points to 126, while South Australia decreased three points to 129 but remained the highest in the country.
Western Australia's confidence levels increased, rising three points to 119. The ACT climbed one point to 105.
"Australia's housing crisis remains a significant societal challenge for our federal and state government, fueled by contributing factors such as the ongoing labor shortage and regulation reform," said Chris Skelton, General Manager, APAC, Procore.
"Now more than ever, access to data-driven construction management technology is fundamental to help the property industry reduce risk, drive operational efficiency, and build together."
Forward work expectations are in positive territory at 26 on the index, likewise for staffing level expectations which sit at eight on the index. Both, however, are sitting below historical averages.
