CONFIDENCE in the Australian property sector has surged to its highest levels in at least three years with Queensland and NSW leading the way, as many back the industry to pick up the slack from a downturn in mining activity and become a bigger source of economic growth.

The Property Council-ANZ Property Industry Confidence Index for the quarter to March found national property industry confidence had jumped eight points from the December quarter, reaching a high of 140 points.

This is well up from a year ago, when confidence was recorded at 107 points.

A score of 100 indicates a neutral level of sentiment.

The survey, of close to 2600 property professionals across the residential, office industrial, hotel and retail sectors, was started in 2011. All sectors are at record levels for the March outlook, except for the office market, with high vacancies expected to remain for the year.

Sentiment is highest for the strongly performing residential sector. Confidence in the residential construction sector is up 45 points over the year to March.

Analysts said the results showed the property sector was preparing to break the shackles of post-global financial crisis conservatism. But some think confidence will wane if unemployment rises above 6 per cent.

Property Council of Australia chief executive Peter Verwer said the strong home price growth and construction levels in 2013 had buoyed the industry, with most expecting it to be the driver of more broad-based economic growth as mining tapered off.

Figures from researcher RP-Data Rismark found home prices increased nationally last year by 9.8 per cent, while the latest building approval figures showed a 23 per cent increase in the year to November 2013.

“The message from (the) survey is that it is property and construction that will lead the way to future prosperity,” Mr Verwer said. “This is more than a bounce due to political events; this is Australia’s largest industry powering back up after a long period of consolidation.”

Queensland is leading industry confidence with a 48-point surge over the year to 157 points. Property executives also have faith in a rebound in NSW (147 points), Victoria (135), Western Australia (135) and South Australia (130). Because of a slowdown in the mining sector, Western Australia improved only four points over the year, and the Northern Territory dropped 12 points.

ANZ head of property research Paul Braddick said the industry was not getting ahead of itself, despite predictions by most economists the residential sector would moderate this year. “We’re not seeing any obvious trigger for why the momentum should slow in the mid-term as interest rates are expected to stay low,” he said.

“We’re still seeing a release in pent-up sales demand that has been built up over previous years when house prices were falling and confidence was low. We’re not expecting as strong percentage increases in house prices, but it will still be solid and there is plenty of momentum.”

BIS Shrapnel associate director Kim Hawtrey said there had been an “austerity fatigue” in the property sector since the GFC. There were grounds for the improved sentiment, as the global economy was looking brighter, he said.

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