Australian Residential Development

Overview

For most of 2019, land once earmarked for residential development has been challenged by increased demand in alternate asset classes (office, hotels, student living, aged care). In many cases, his has provided relief for developers with overcommitted landbanked sites and some have resorted to packaging off -the-plan bulk apartment sales in suburbs with pockets of oversupply. The strict lending criteria for buyers has now been loosened, but access to traditional finance is still difficult for many local and offshore developers. As a result of lack of construction starts, the pipeline of new apartments tapers back significantly over the next three years, potentially not supporting the population growth projected for major Australian cities. 

In recent years, there has been substantially more land released for lowdensity in growth corridors. There has been an uptick in first home buyers coming through, although many renters are still opting to stay put, in order to live closer to work and play. There has recently been a pick-up in off-market development site activity with flight to quality sites. Many sales are being structured to be settled over 18-24 months, aligning with growth forecast in established capital values.