Property developers are pushing ahead with new projects despite softer market conditions, according to the latest NAB Commercial Property Survey, with nearly half planning to break ground within six months.
Queensland led the field, with 75% of developers there planning to commence projects in the next six months, followed by Western Australia at 67%. New South Wales came in at 46%, while Victoria and South Australia/Northern Territory trailed at 28% and 25%, respectively. Nationally, 49% of developers intend to start new projects in that timeframe, above the long-run average of 47%.
Developers are also leaning more heavily on land they already hold, with nine in 10 planning to use existing land bank holdings for future projects, up sharply from 74% the previous quarter.
NAB executive, specialised banking, Jasmine Ashton (pictured), said the willingness to draw on land banks pointed to developers positioning early for future demand rather than pausing activity.
"Rather than waiting on the sidelines, developers are making strategic decisions now, including drawing on existing land banks to keep projects moving and prepare for future demand," Ashton said.
While commercial property confidence softened over the June quarter, sentiment remained positive across both the 12-month (+20) and two-year (+39) outlooks.
Ashton said the results reflected a sector taking a longer-term view of the market.
"Australian businesses have repeatedly demonstrated their ability to adapt and invest through changing conditions, and today's property developers are showing that same resilience," she said.
Brisbane-based developer Gavin Jones, of JSF Property Management, said demand fundamentals were continuing to support new investment, particularly in high-growth regional corridors.
"The underlying demand for housing remains very strong, particularly in growth corridors throughout Southeast Queensland, and more affordable parts of the market," Jones said.
Nationally, that demand pressure sits against a backdrop of undersupply — Australia remains well behind pace on its 1.2-million-home Housing Accord target, adding weight to calls for continued development activity in high-growth states. Australia had completed just 307,635 homes after the first 21 months of the Accord, against a required pace of 420,000 — a shortfall of more than 112,000 dwellings.
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