16-10-2015, 11:27 PM
Wary developers seeing little signs of residential price falls
Samantha Hutchinson
[Image: sam_hutchinson.png]
Property Writer
[Image: 108697-827a6b74-73d2-11e5-aecd-070d43501fda.jpg]
Lend Lease CEO Steve McCann, left, with Mike Baird and Andrew Constance at Darling Harbour. Picture: Dylan Robinson. Source: News Corp Australia
[b]The nation’s biggest developers are waiting nervously for signs that the residential market is easing, as sales and inquiry levels hold strong.[/b]
“We have been waiting to see if inquiries or sales rates would start falling, but we are yet to see any evidence of that happening in the projects we have released,” Mirvac chief executive Susan Lloyd-Hurwitz said.
Lend Lease chief executive Steve McCann agreed, noting the house view was that the market was approaching its peak, but sales rates, inquiry and prices in apartments and homes were yet to show evidence of a market that was waning.
Nevertheless, the company has lifted its pre-sales thresholds to 70 per cent and emphasised that it would be disciplined in halting projects if the thresholds dipped lower.
“We’ve got a consistent and proven strategy and significant growth in the pipeline in an environment where top-line growth is getting harder and harder to achieve,” Mr McCann said.
The comments come in the same week Macquarie analysts called the market’s peak, and predicted that house prices could fall up to 7.5 per cent from March 2016 onwards.
Credit Suisse analysts were similarly bearish, arguing that historical data indicated that home-sales activity could fall by more than 40 per cent in the coming months, which could see prices fall as supply outpaces demand.
But inquiry levels are likely to persist at current levels until early next year, according to HIA chief economist Harley Dale, who believes that tighter lending conditions will take some time yet to substantially dampen inquiries and apartment sales figures.
“It’s all about how much of the pipeline gets converted into construction, and at this point in time there’s nothing to suggest this conversion won’t occur, and keep occurring even into next year,” Mr Dale said. “There’s still a lot of demand out there and while inquiry rates are still high, they may start easing over the next six months as credit conditions tighten. They’ve tightened already, but it comes with a lag.”
CBRE residential director David Milton noted that conversions rates relating to sales for every inquiry had dipped slightly, but had been stable for five months or so with one sale in every eight inquiries, down from one in every five.
“There’s a lot more stock on the market,” Mr Milton said.
- THE AUSTRALIAN
- OCTOBER 17, 2015 12:00AM
Samantha Hutchinson
[Image: sam_hutchinson.png]
Property Writer
[Image: 108697-827a6b74-73d2-11e5-aecd-070d43501fda.jpg]
Lend Lease CEO Steve McCann, left, with Mike Baird and Andrew Constance at Darling Harbour. Picture: Dylan Robinson. Source: News Corp Australia
[b]The nation’s biggest developers are waiting nervously for signs that the residential market is easing, as sales and inquiry levels hold strong.[/b]
“We have been waiting to see if inquiries or sales rates would start falling, but we are yet to see any evidence of that happening in the projects we have released,” Mirvac chief executive Susan Lloyd-Hurwitz said.
Lend Lease chief executive Steve McCann agreed, noting the house view was that the market was approaching its peak, but sales rates, inquiry and prices in apartments and homes were yet to show evidence of a market that was waning.
Nevertheless, the company has lifted its pre-sales thresholds to 70 per cent and emphasised that it would be disciplined in halting projects if the thresholds dipped lower.
“We’ve got a consistent and proven strategy and significant growth in the pipeline in an environment where top-line growth is getting harder and harder to achieve,” Mr McCann said.
The comments come in the same week Macquarie analysts called the market’s peak, and predicted that house prices could fall up to 7.5 per cent from March 2016 onwards.
Credit Suisse analysts were similarly bearish, arguing that historical data indicated that home-sales activity could fall by more than 40 per cent in the coming months, which could see prices fall as supply outpaces demand.
But inquiry levels are likely to persist at current levels until early next year, according to HIA chief economist Harley Dale, who believes that tighter lending conditions will take some time yet to substantially dampen inquiries and apartment sales figures.
“It’s all about how much of the pipeline gets converted into construction, and at this point in time there’s nothing to suggest this conversion won’t occur, and keep occurring even into next year,” Mr Dale said. “There’s still a lot of demand out there and while inquiry rates are still high, they may start easing over the next six months as credit conditions tighten. They’ve tightened already, but it comes with a lag.”
CBRE residential director David Milton noted that conversions rates relating to sales for every inquiry had dipped slightly, but had been stable for five months or so with one sale in every eight inquiries, down from one in every five.
“There’s a lot more stock on the market,” Mr Milton said.