Oh-oh… There goes the Brisbane property market
We’ve been posting about the issue of apartment building in Brisbane for some time. Now, lenders like Suncorp have brought in tougher measures to crack down on high-rise apartment purchases amid growing concerns about oversupply and falling prices. Is this an isolated phenomenon? Or a signal of worse pain to come for property investors?
Back in March we wrote a blog post entitled Brisbane Apartments are Ground Zero which you can find here.
This week the Australian Financial Review reported that Suncorp has now blacklisted 39 postcodes in Brisbane representing more than 100 suburbs.
According to the article:
“Big banks are set to announce tougher measures to crack down on high rise apartment purchases including blacklisting more than 100 Brisbane suburbs, doubling the minimum apartment [size] to qualify for funding, evidence of rental cash flows and tough new valuation criteria.
“Lenders such as Adelaide Bank are introducing “minimum funding requirements” requiring apartments to have their own bathrooms, kitchens, laundries and windows in key rooms, such as bedrooms and lounge rooms.
“Nervous lenders are turning the screws on apartment buyers amid growing concerns about over-supply, falling prices, restrictions on foreign buyers and potential risk from combustible cladding widely used on high rise apartment exteriors.
“For example, new apartment sales in the Queensland capital have reportedly collapsed by more than 70 per cent in a year, prompting desperate developers to offer lucrative incentives to attract buyers.
“Developers, such as Consolidate Properties, claim Brisbane has been cruelled by restrictions on financing set up to ease speculative buying in Melbourne and Sydney.
“Other developers, such as ForceOne Development, have been using incentives like a free Toyota Yaris to encourage apartment sales.
“Several recent reports by independent consultants have warned demand will be exceeded by the estimated supply of new apartments in Brisbane, which will add to downward pressure on prices.
“Other lenders, including Citi, have also compiled postcode blacklists amid concerns about over-supply and falling demand.
You can find the full article here.
Roger Montgomery is the Founder and Chairman of Montgomery Investment Management. Roger has over three decades of experience in funds management and related activities, including equities analysis, equity and derivatives strategy, trading and stockbroking. Prior to establishing Montgomery, Roger held positions at Ord Minnett Jardine Fleming, BT (Australia) Limited and Merrill Lynch.
This post was contributed by a representative of Montgomery Investment Management Pty Limited (AFSL No. 354564). The principal purpose of this post is to provide factual information and not provide financial product advice. Additionally, the information provided is not intended to provide any recommendation or opinion about any financial product. Any commentary and statements of opinion however may contain general advice only that is prepared without taking into account your personal objectives, financial circumstances or needs. Because of this, before acting on any of the information provided, you should always consider its appropriateness in light of your personal objectives, financial circumstances and needs and should consider seeking independent advice from a financial advisor if necessary before making any decisions. This post specifically excludes personal advice.
craig.cory.54
:
Some lenders are just choosing not to deal with folks who can’t stump up 20% of their own investment. That’s just common sense at any time in the cycle, surely?
jimbo james
:
Absolutely Craig, but for the last 20 years they’ve dished out up to 105% without batting an eyelid. Why the sudden concern and change of strategy? Why is Scott Morrison over in the US making sales pitches to bankers? Sounds like the jitters started in concert with the softening Sydney market.