Some of Australia’s largest developers are likely to exit the apartment market after changing regulations have forced sale prices down.
“It’s not bad, it’s very bad,” were the words of billionaire Harry Triguboff, managing director of Meriton, in an interview with the Australian Financial Review (AFR). “When we start saying that stamp duty for foreign buyers should be 12% instead of 4%, that is called stupid.”
“Many of the Chinese can’t settle. So now we have to resell them –- there is another problem,” he said.
“And everyone thought that the Australian buyer would come in when the prices started coming down –- they haven’t — I knew they wouldn’t –- it wouldn’t make any sense if they did.”
Tim Gurner, founder of developer Gurner, said that higher charges and tighter restrictions on lending to foreign investors could risk pushing apartment prices significantly higher as new supply dries up. This would create additional housing affordability concerns for Australians looking to enter the property market.
Whilst the developers are crying foul the latest data shows a slightly different perspective as evidenced by the latest ANZ-Property Council of Australia survey for the March quarter:
The data does show a decline in all states bar South Australia but not the “falling off a cliff” scenario some developers want us to believe.
Apartment Development approvals are showing strong signs also with private-sector dwelling approvals excluding houses (largely apartments) increasing by 30.6% to 11,153 in seasonally adjusted terms, the highest since August 2016.
Whilst foreign investment in apartments has definitely slowed, it appears the slack has been taken up by immigration with Australia’s population increasing by 390,000 people in the year to June 2017.
Australia is a desirable place to live and high levels of immigration are likely to continue. If the larger developers opt out of the apartment market, it’s likely others will step up to take their place.