Property industry confidence climbed by 13 index points, reversing a year of decline, according to the latest ANZ/Property Council Survey for the September quarter.

The data showed that industry confidence improved across all states and territories — except for the ACT — following the federal election outcome. South Australia recorded the largest increase, up by 16 index points.

“This strong sentiment bounce is driven by some welcome post-election policy certainty out of Canberra and will be an encouraging sign for the RBA and national policymakers,” said Ken Morrison, chief executive of the Property Council. “Following the federal election, we have had a quadrella of positive policy news which translated into a strong sentiment bounce: certainty on negative gearing and capital gains tax changes, an interest rate cut, APRA’s lending standards review and the proposed first home buyers loan deposit scheme. These are very welcome steps and have led to much stronger expectations of national economic growth and the availability of credit.”

Residential construction activity, though, will likely continue dropping, and this will affect jobs and the economy.

“The property sector is not immune from the challenges facing the rest of the economy, and a number of state governments have just embarked on a range of investment-sapping tax increases,” Morrison said.

Morrison said that state budgets in Queensland, Victoria and South Australia hit the property industry with arbitrary and poorly designed tax increases — and the change will take a toll on investment and job creation, and risk undermining the current sentiment turnaround.

Over the past month, lower interest rates, the planned modification to the interest rate floor by the regulator, and the removal of uncertainty around the impact of the possible tax policy changes have improved sentiment toward housing. The rise in the auction clearance rate in Sydney and Melbourne to its highest level in more than a year reflected the boost, according to ANZ Head of Australian Economics David Plank.

“The results of the latest ANZ/Property Council Survey capture this shift, with most parts of the survey showing material improvement,” Plank said. “Of particular note is the marked improvement in credit availability. This measure has proved to be a reliable indicator of shifts in housing activity in the past and if it remains so, it suggests better times ahead. Certainly, it seems safe to say that the worst of the house price declines are well and truly behind us. This doesn’t mean we are expecting a shift back to dramatic increases in house prices. This is not something we see as desirable, given the still stretched levels of affordability in Sydney and Melbourne. Nor do we think it is likely with the more stringent credit policies that are in place.”