“Major banks are engaging in illogical and unreasonable behaviour,” DFP principal Baxter Gamble said.
He said there was a clear reluctance to lend to foreign purchasers, mostly Chinese, and investors, many of which are self-managed super funds.
“An occasional inquiry from a stranded purchaser is now turning into a full-blown queue of apartment buyers who signed up off-the-plan in good faith only to be advised that they are unlikely to obtain a mortgage without first finding a much larger deposit,” Mr Gamble said.
Analysts are warning of the rising risk that foreign and domestic investor buyers, who comprise about 70 per cent of the residential unit market, will be unable to settle purchases under the banks’ tightened lending restrictions.
Melbourne property developers said off-the-plan apartment sales had weakened dramatically, while in Sydney Chinese developers were starting to sell apartment sites they bought only in the past few years because banks would not finance construction.
“Chinese buyer activity has reduced for the existing players,” said Andrew Antonas, director of Sydney-based Matrix Property.
“Chinese demand is falling off because it’s getting harder to bring money out of China and there’s more stringent financing here, so they are going for loans here through local banks, and local banks are not lending as much to these people.”
Mr Antonas said bank valuations of new apartments were typically 5 to 10 per cent below what the buyers had paid.
“We are getting a lot of inquiry from Chinese and local developers who have bought sites and who are now finding it difficult to get finance to build the apartment blocks,’’ he said.
Overseas apartment developers, faced with bank demands for business track records and solid pre-sales of apartments as conditions of lending for construction, are opting to sell their sites.
The Brisbane market for apartment sites faces a major readjustment, a senior property executive told The Australian, and many mooted apartment towers would now not happen.
“If you have a real project in a good location and you have an appropriate style product you will sell it, but if you have a cookie-cutter approach, in an average location with average product, it might be extremely difficult to get out of it,” said the executive, speaking on condition of anonymity.
And more at the AFR too:
“If purchasers cannot get funding to settle the units for which they have signed a contract, the bank that lent funds for the development to proceed may press the developer to sell at ‘firesale’ prices.”
Mr Gamble said banks were aggressively withdrawing from construction and development by setting hurdles, which in many cases, were “impossible to overcome”.
“It beggars belief that banks have adopted lending policies to restrain investors and in one bank’s case imposed a blanket ban on lending to foreign buyers.”
Boom and bust. It has always been thus. Everyone is to blame, including regulators who stoked the following when their dreams of an endless mining boom turned to dust:
