Recent research into sentiment within the Australian property industry has found a positive outlook despite tighter lending restrictions and tougher access to credit.
The survey, conducted by The Urban Developer together with Development Finance Partners, examined responses from over 1,000 respondents in the property industry and found that over 75% were either cautiously or very optimistic about the coming 12 months.
The Q2-2017 Industry Sentiment Survey
also looked at the biggest challenges in the industry. The most common issues were obtaining construction funding and securing finance for pre-sale purchaser settlements with 37% flagging both these hurdles separately. These challenges were followed by acquiring viable development sites (35%), obtaining development approvals (20%) and obtaining development funding (12%).
The results were released at The Urban Developer’s Defensive Development series in Brisbane, Sydney and Melbourne.
“Whilst funding conditions are getting tougher and access to credit is continuing to tighten, we are seeing that markets across the country are recalibrating from unprecedented levels of construction activity to more normal levels,” said Baxter Gamble, managing director of Development Finance Partners in a moderated panel in Sydney.
“Smaller developers are feeling the greatest pinch of APRA’s (Australian Prudential Regulation Authority
’s) tighter banking controls which are starting to wash through the development sector and restrict new commencements.”
Adam Di Marco, founder and publisher of The Urban Developer, said that the risk of residential dwelling supply in Australia’s capitals was contained in a number of “micro-markets”. The underlying fundamentals remained sound elsewhere, he added.
“The population of Australia’s capital cities continue to grow at some of the fastest rates in the developed world. Whilst we recognise the need to stabilise record levels of new supply, we also have major affordability issues, particularly in Sydney and Melbourne, which will only be exacerbated by a sustained period of low supply.
“We can’t turn the tap off completely. We need to encourage a more sustainable level of new construction activity across individual markets based on a needs-based assessment of residential demand. We cannot simply cut our nose off to spite our face. Australia’s next generation of home owners deserve a more sensible approach.”
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