Powered by MOMENTUM MEDIA
subscribe to our newsletter

Property developers increasingly seeking ‘urgent’ assistance

A non-bank lender has reported a 16 per cent increase in property developers seeking urgent financial assistance against the backdrop of Australia’s housing slump. 

Chifley Securities announced a 16 per cent rise in property developers seeking urgent financial help as their project sales and pre-sales have waned, due in part to “tighter lending controls”. 

“The tighter lending controls imposed by the major banks are squeezing both buyers and developers, with the result being unfinished projects, which will exacerbate the increasing shortage of housing as the population in the eastern states continues to grow,” Dominic Lambrinos, principal at Chifley Securities, said.

According to the non-bank lender, some banks have been asking for a 100 per cent debt cover or more on pre-sales this financial year as one of their conditions precedent.

Further, private lenders tend to lend with lower pre-sales levels but at a higher cost of finance.

Advertisement
Advertisement

“We expect that the tighter finance conditions and less investment activity will continue to challenge developers, and we are seeing more projects falling over completely,” Mr Lambrinos said. 

In the 2018-19 financial year, the Chifley Securities settled 72 loans ranging from $15 million to $50 million on developments ranging between 20 and 100 apartments.  

“Most of the loans are for developments located in the outer suburbs of the Eastern Seaboard’s capital cities, being 40 kilometres from Sydney’s CBD, 30 kilometres from Melbourne and 20 kilometres from Brisbane,” Mr Lambrinos said.  

“The developments... generally average around $26 million and are being challenged as purchasers, many of whom are young couples and families, [who] simply cannot arrange finance with their lenders or are spooked by the market slowdown.”

Mr Lambrinos added: “Meanwhile, many investors are now sitting on the sidelines, forcing developers to arrange alternative arrangements to complete their projects or hold on to them until sales recover – in many cases through price drops of up to 30 per cent.”

PROMOTED CONTENT


The non-bank lender also reported “strong” demand for its recently launched loan products to refinance unsold apartments and to provide finance for developers struggling to reach the required pre-sales. 

Chifley Securities increased lending to developers and landowners, from $1.8 billion to $2 billion in the 2017-18 financial year, with a large proportion of loans going to projects that are underway.

[Related: APRA changes to limit pull of ‘riskier’ non-banks]

Property developers increasingly seeking ‘urgent’ assistance
House in construction
mortgagebusiness

Ezekiel MacNevin

Ezekiel is a journalist on the mortgages, property investment and wellness titles at Momentum Media. 

Before joining the team in 2019, he was a freelance journalist for Vice Australia, Pulse Radio and the Sydney-based travel publication Global Hobo, among others. 

Ezekiel studies a double Bachelor of Communications and International Studies at the University of Technology, Sydney.

You can email Ezekiel on: This email address is being protected from spambots. You need JavaScript enabled to view it.

 

Latest News

The RBA has studied the role of collateral in credit markets under stress, and has found that collateralised borrowing rose for some segment...

Auction volumes surged significantly over the December quarter across Australia, largely attributed to a “resurgence” in Melbourne, acco...

Loan conditions and collateral guarantees continue to be major stumbling blocks for small businesses looking to access financing, according ...

FROM THE WEB

Join a group of highly informed brokers.

Broker Pulse, a community-driven knowledge base of lender performance Reveal exactly which lenders are making life easiest for brokers and their clients by taking this monthly survey and joining a group of highly informed brokers who leverage these insights every month.

JOIN NOW
podcast

LATEST PODCAST: A new record in mortgage approvals

Do you expect to see strong uptake of the HomeBuilder scheme?

Website Notifications

Get notifications in real-time for staying up to date with content that matters to you.