INDUSTRY TRENDS, PROPERTY ADVICE
What is Santa Bringing Developers for Christmas?
Posted by Development Ready on Nov 20, 2019

As we head into the final month of the year, there is renewed confidence amongst developers and consultants and even some agents are starting to have a smile on their face again! The market, after close to two years of tight conditions is well and truly starting to show green shoots.

For the first time in a long time, the media is on the markets’ side (clearly execs at Newscorp and Fairfax where becoming frustrated at their eroding house values!). There is constant good news stories reporting forecasts of double digit growth in median houses prices over the next 12 months in major cities.

High or well improved clearance rates are being reported in the residential market, demonstrating an increased confidence from consumers.

SO WHAT’S CHANGED?
NOT MUCH REALLY…

Securing major bank funding is still very challenging, pre-sales are still time consuming and the product needs to be priced correctly and be of good quality to move, and despite a correction in land values, these are still at historically very high levels.

SO WHY IS THE MARKET FREEING UP? WHAT ARE DEVELOPERS SEEING THAT WAS NOT THERE EARLIER IN THE YEAR?

Clearly the improved residential market, which since the federal election in May, has been building momentum. I was quietly cynical of the high clearance rates throughout the winter months given the severe shortage of stock (typically less than half compared to the same time last year). However, as Spring arrived, clearance rates have maintained a very healthy position in the mid 70% range and stock levels have increased significantly to close to last year’s levels. This is the subtle change that has occurred in the market, that was not obvious from first sweep of the data. However with volume up again, the residential market has a made a clear statement that it’s in recovery mode and gaining momentum.

Developers are taking heed of these improved conditions and are returning to the market, keen to secure their next site and take advantage of the residential upswing. These acquisitions are typically targeting to be pre-selling into the market in 2021-2022, when investors in pre-sale product are anticipated to be back in force.

So what is Santa bringing developers for Christmas this year? Market confidence!


Contributed by
Julian White
Director, CBRE City Sales and Development Sites
0422 764 137
[email protected]



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