Gottiboff: Apartment market to boom and bust simultaneously

By Leith van Onselen

A fortnight ago, The Australian’s Robert Gottliebsen ludicrously claimed that apartment prices across Sydney had surged by 10% in the wake of the Coalition’s shock 18 May election victory:

The Chinese realise Australia’s outlook has changed and have created a surge of buying that has skyrocketed Sydney apartment prices by 10 per cent in just two weeks.

…These fundamental changes will soon spread throughout the economy (retail will take longer)…

…A jubilant Harry Triguboff is staggered. The Chinese rush into the Sydney market covers both existing and off-the-plan apartments. Turnover has skyrocketed. Triguboff was holding the market by financing buyers but that’s no longer necessary—they have the money.

Gotti’s jubilance follows his buddy, ‘Highrise’ Harry Triguboff’s, exaltation that he has stopped discounting his apartment developments:

In the final week of the election campaign, Prime Minister Scott Morrison announced a scheme to guarantee the deposit of first home buyers who had only saved 5 per cent of the purchase price.

“I won’t have to discount anymore,” he told The Business.

“I sell now probably at a 10 per cent discount and, besides that, I give [buyers] money at 3 per cent and help them with the stamp duty, so I think at first I should be able to get the full price”…

“I think [property prices] will rise — I don’t think it will be a quick rise, but it will rise”…

“I can already feel the difference,” he told the program…

Meriton sold five apartments on the Gold Coast on Monday following the election. “The buyers didn’t know whether to go ahead or not, but once they saw the results of the election they are going ahead,” he said.

Yesterday, Gotti pivoted and warned that the apartment construction bust in Sydney and Melbourne would send many developers broke, while simultaneously sending apartment prices skyrocketing:

One of the engine rooms of the strong domestic economy in recent years —building inner city apartment in Melbourne and Sydney— has slowed to a dangerous level…

Unless the NSW and Victorian governments can find a way out of this mess apartment building is going be sharply curtailed and developers will shut down.

Normally such decimation of an industry is caused by demand but in June 2019 demand is not the problem… chaos reigns in both cities [Sydney and Melbourne] because supply cannot be generated to meet looming demand… In both Sydney and Melbourne it takes about three years for a development to get through the current approval morass…

In Sydney and Melbourne, with supply unable to be generated in the next year or two, we will be looking at shortages and much higher prices, causing chronic and artificially created liveability problems in both major cities because of their rising populations…

With development stopped it is back to much higher apartment prices particularly in Sydney, so enriching Sydney’s biggest apartment owner Harry Triguboff…

If demand isn’t the issue, then why are we seeing projects being halted that already have approvals in place? And why have desperate developers across both Sydney and Melbourne been offering “massive” incentives to clear stock?

Gotti moves between scares on oversupply and slowdowns so fast we can’t keep up.

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