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28-09-2015, 07:24 AM
(This post was last modified: 28-09-2015, 07:33 AM by greengiraffe.)
http://www.valuebuddies.com/thread-4380-...#pid120210
Home buyers look offshore for funds
Greg Brown
[Image: greg_brown.png]
Property Reporter
Sydney
[Image: 346266-c5eb3776-6509-11e5-bacc-7f9d9a51fc89.jpg]
Frasers Property Australia chief executive Rod Fehring. Picture: Sam Mooy Source: News Corp Australia
[b]Off-the-plan home buyers are increasingly using alternative ways to settle if they can’t secure funding from the major banks, with more seeking finance from offshore institutions, according to Rod Fehring, chief executive of apartment developer Frasers Property Australia.[/b]
Mr Fehring said Frasers, which had $1.5 billion worth of contracts exchanged that were yet to settle, was not concerned that stronger regulations on property lending would force buyers to walk away from their purchase.
Westpac chief economist Bill Evans last week warned that many who bought off-the-plan two years ago would struggle to settle when the project was completed because of harsher lending regulations being applied by the Australian Prudential Regulation Authority.
But Mr Fehring said people were instead intent on going outside the big four banks, with more securing a mortgage through banks that were based overseas.
“We are seeing people avail themselves of other sources of funding. A lot of the prudential requirements that have been applied to the four main banks do not necessarily apply to offshore banks and they do not necessarily apply to the smaller onshore banks,” Mr Fehring told The Australian.
“Most of our contracts on hand were sold a year to two years ago and they are sitting on anywhere between 10 per cent and 23 per cent capital gain by virtue of the strength of what has happened in the Australian residential markets,” he said.
“The question is if you’ve got $60,000 to $80,000 invested in a deposit would you walk away from that on a $600,000 property when you are sitting on a $100,000 capital gain? No, you would not. You will find that you can finance it.”
Mr Fehring was formerly of the old listed developer Australand, which was last year taken over by Singapore’s Frasers Centrepoint in a $2.6 billion deal.
The $4.6bn group is developing the $2bn Central Park project in inner Sydney, while also having active projects in Brisbane, Melbourne and Perth.
Mr Fehring warned not to assume that buyers would “act as a flock” if they had initial trouble attaining finance. “There are all sorts of people involved and they make their own arrangements,’’ Mr Fehring said.
“Some are getting parental support (as) first-home buyers, some have got other assets that they are drawing on, some are borrowing on the basis that, because they have got the capital gain, the valuation is coming in well above what they paid a deposit on.” But he did believe that the new regulations would deter many new investors, and said there had been an increase in interest from owner-occupiers and even first-home buyers.
“We are seeing a relatively high proportion of first-home buyers surprisingly, which is the reverse of what you would (expect). Normally first-home buyers would run at 5-10 per cent of your sales; we are seeing that in the 15-20 per cent (range) over the past 12 months.”
His remarks come as auctions in the first spring “Super Saturday” improved from last week, despite signs that the market is slowing.
With a September record of 2390 homes put under the hammer during the week, 74.2 per cent of auctioned homes in Sydney found a buyer, while Melbourne posted clearance rates of 73.3 per cent.
Mr Fehring said he did not expect to see much further price growth in Sydney, while Brisbane would improve.
He said there were signs of an apartment oversupply in the Melbourne CBD, while there was also overbuilding of detached homes in the northern growth corridor.
Home buyers look offshore for funds
- THE AUSTRALIAN
- SEPTEMBER 28, 2015 12:00AM
Greg Brown
[Image: greg_brown.png]
Property Reporter
Sydney
[Image: 346266-c5eb3776-6509-11e5-bacc-7f9d9a51fc89.jpg]
Frasers Property Australia chief executive Rod Fehring. Picture: Sam Mooy Source: News Corp Australia
[b]Off-the-plan home buyers are increasingly using alternative ways to settle if they can’t secure funding from the major banks, with more seeking finance from offshore institutions, according to Rod Fehring, chief executive of apartment developer Frasers Property Australia.[/b]
Mr Fehring said Frasers, which had $1.5 billion worth of contracts exchanged that were yet to settle, was not concerned that stronger regulations on property lending would force buyers to walk away from their purchase.
Westpac chief economist Bill Evans last week warned that many who bought off-the-plan two years ago would struggle to settle when the project was completed because of harsher lending regulations being applied by the Australian Prudential Regulation Authority.
But Mr Fehring said people were instead intent on going outside the big four banks, with more securing a mortgage through banks that were based overseas.
“We are seeing people avail themselves of other sources of funding. A lot of the prudential requirements that have been applied to the four main banks do not necessarily apply to offshore banks and they do not necessarily apply to the smaller onshore banks,” Mr Fehring told The Australian.
“Most of our contracts on hand were sold a year to two years ago and they are sitting on anywhere between 10 per cent and 23 per cent capital gain by virtue of the strength of what has happened in the Australian residential markets,” he said.
“The question is if you’ve got $60,000 to $80,000 invested in a deposit would you walk away from that on a $600,000 property when you are sitting on a $100,000 capital gain? No, you would not. You will find that you can finance it.”
Mr Fehring was formerly of the old listed developer Australand, which was last year taken over by Singapore’s Frasers Centrepoint in a $2.6 billion deal.
The $4.6bn group is developing the $2bn Central Park project in inner Sydney, while also having active projects in Brisbane, Melbourne and Perth.
Mr Fehring warned not to assume that buyers would “act as a flock” if they had initial trouble attaining finance. “There are all sorts of people involved and they make their own arrangements,’’ Mr Fehring said.
“Some are getting parental support (as) first-home buyers, some have got other assets that they are drawing on, some are borrowing on the basis that, because they have got the capital gain, the valuation is coming in well above what they paid a deposit on.” But he did believe that the new regulations would deter many new investors, and said there had been an increase in interest from owner-occupiers and even first-home buyers.
“We are seeing a relatively high proportion of first-home buyers surprisingly, which is the reverse of what you would (expect). Normally first-home buyers would run at 5-10 per cent of your sales; we are seeing that in the 15-20 per cent (range) over the past 12 months.”
His remarks come as auctions in the first spring “Super Saturday” improved from last week, despite signs that the market is slowing.
With a September record of 2390 homes put under the hammer during the week, 74.2 per cent of auctioned homes in Sydney found a buyer, while Melbourne posted clearance rates of 73.3 per cent.
Mr Fehring said he did not expect to see much further price growth in Sydney, while Brisbane would improve.
He said there were signs of an apartment oversupply in the Melbourne CBD, while there was also overbuilding of detached homes in the northern growth corridor.