Invest
Big hold-up in housing builds looms as developers struggle to get financing
Invest
Big hold-up in housing builds looms as developers struggle to get financing
Approvals for building new dwellings could fall by another 20 per cent, according to major bank ANZ, adding another stressor to Australian housing markets.
Big hold-up in housing builds looms as developers struggle to get financing
Approvals for building new dwellings could fall by another 20 per cent, according to major bank ANZ, adding another stressor to Australian housing markets.
The latest dwelling approvals data indicates a 9.4 per cent drop for August, which ANZ senior economist David Plank believes is due to tightening credit conditions.
“What has been quite different about the cycle in dwelling approvals since 2015 is that they haven’t been driven by interest rates,” Mr Plank said.
“Prior to this, the swings in approvals reflect the cycle in interest rates.
“We think the recent cycles in approvals have primarily been about the availability of credit.”
The ANZ economist added that he expects housing approvals to continue dropping if tighter credit conditions persist amid public scrutiny from the financial services royal commission.
“If we assume no easing of the credit tightening until at least after the royal commission delivers its final report in February 2019, then it seems reasonable to expect that dwelling approvals could be off as much as 15–20 per cent YoY in trend terms by early next year,” Mr Plank said.
“We think the reduced availability of mortgage finance, particularly for investors, is impacting pre-sales and hence the ability of developers to secure finance.”
However, Mr Plank claimed that when compared to previous downturns driven by interest rate changes, a 15–20 per cent drop-off in dwelling approvals is “not an overly huge downturn”.
“[We] think downturns driven by interest rates are likely to be deeper than those caused by a regulatory tightening of credit because higher interest rates impact the wider economy more generally.
“Time will tell whether it’s the correct way of thinking about the current cycle. Still, it’s a downturn that will cause a reasonably material pullback in residential construction.”
This news comes as the first full year of price drops for the residential property market in Australia were recorded as of last month.
RELATED ARTICLES
Property
North platform adds household reporting feature to boost adviser efficiency
AMP's North platform has launched consolidated household reporting across multiple client accounts, helping financial advisers streamline their client review processes. Read more
Property
What Adds The Most Value To Properties?
Wondering how to up the value of your property? Properties are worth a lot of money in general, but there’s always a way to maximise value. The good news is that most of the things you can do to ...Read more
Property
Centuria reports strong growth in alternative real estate sectors for FY24
Centuria Capital Group has reported significant growth in alternative real estate sectors for the 2024 financial year, driving stable performance and increased guidance for FY25. Read more
Property
How to leverage equity in your home for investment or renovation
Home equity, the value of your property minus any debts owed, is a powerful financial resource many homeowners in Australia can utilize to further their financial goals. Whether you're looking to ...Read more
Property
Exploring REITs: Real estate investment without buying property
Real Estate Investment Trusts (REITs) offer a compelling investment alternative for those interested in the real estate market but may not want to endure the complexities and capital requirements of ...Read more
Property
Retirement communities: a pivotal element in meeting Australia's housing targets
The Retirement Living Council (RLC) has recommended that retirement communities should be considered a vital part in the Australian Government's initiative to fulfill the Housing Australia Future Fund ...Read more
Property
Australians adjust financial strategies amid changing property market dynamics
The 2023 calendar year saw Australian borrowers acquiring a total of $300.9 billion in new loans for property purchases, marking a 12.7% decrease from the previous year. Read more
Property
Split home loans unlocking doors for Aussie buyers
Australians are teaming up to dive into the real estate market and seize the advantages of home ownership, with the trend of split home loans surging as family and friends unite to buy properties ...Read more
Property
North platform adds household reporting feature to boost adviser efficiency
AMP's North platform has launched consolidated household reporting across multiple client accounts, helping financial advisers streamline their client review processes. Read more
Property
What Adds The Most Value To Properties?
Wondering how to up the value of your property? Properties are worth a lot of money in general, but there’s always a way to maximise value. The good news is that most of the things you can do to ...Read more
Property
Centuria reports strong growth in alternative real estate sectors for FY24
Centuria Capital Group has reported significant growth in alternative real estate sectors for the 2024 financial year, driving stable performance and increased guidance for FY25. Read more
Property
How to leverage equity in your home for investment or renovation
Home equity, the value of your property minus any debts owed, is a powerful financial resource many homeowners in Australia can utilize to further their financial goals. Whether you're looking to ...Read more
Property
Exploring REITs: Real estate investment without buying property
Real Estate Investment Trusts (REITs) offer a compelling investment alternative for those interested in the real estate market but may not want to endure the complexities and capital requirements of ...Read more
Property
Retirement communities: a pivotal element in meeting Australia's housing targets
The Retirement Living Council (RLC) has recommended that retirement communities should be considered a vital part in the Australian Government's initiative to fulfill the Housing Australia Future Fund ...Read more
Property
Australians adjust financial strategies amid changing property market dynamics
The 2023 calendar year saw Australian borrowers acquiring a total of $300.9 billion in new loans for property purchases, marking a 12.7% decrease from the previous year. Read more
Property
Split home loans unlocking doors for Aussie buyers
Australians are teaming up to dive into the real estate market and seize the advantages of home ownership, with the trend of split home loans surging as family and friends unite to buy properties ...Read more
