The Property Council of Australia has released the results of its latest Property Industry Confidence Survey, undertaken in conjunction with ANZ, revealing a fall of three points in the March quarter from 126 to 123. The results mean that the index has fallen by 15 points compared with the reading during the same quarter last year (138).

While the index remains above the 100.0 level and therefore signifies net optimism rather than pessimism, the index is at the lowest level since the September quarter of 2013.

The results have enhanced fears of a housing market slowdown as national average house prices dropped 2.3 per cent in the December quarter. Expectations for house price capital growth over the next twelve months dropped 23 points to register the lowest levels since the survey began in 2011.

Sydney and Melbourne have seen the strongest downturns, with decreases of 3.9 per cent and 3.2 per cent respectively. ‘Peak to trough’ drops in house prices for these areas could reach 15 to 20 per cent according to NZ Head of Australian Economics David Plank. Seasonally adjusted residential building approvals have also fallen to their lowest levels in five years.

Fears seem to have caught on in the financial world, with expectations for debt finance availability dropping 27 points amid tighter credit availability and reduced lending.

Property Council of Australia chief executive officer Ken Morrison said the property sector is being impacted by limited credit and weakening residential markets.

Mr. Morrison called on policy makers to take measures to ensure the property sector is protected appropriately. He highlighted the strong contribution it makes to the broader economy and called for the avoidance of hasty decisions, which could negatively impact the industry.