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Developers in Australia roll out red carpet for wealthy Chinese
- VERA SPROTHEN
- THE WALL STREET JOURNAL
- OCTOBER 21, 2015 8:02AM
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Model Megan Gale with Liana and Iwan Sunito of Crown Group at the Infinity launch, Sydney. Source: Supplied
[b]It used to be Hollywood that staged red-carpet premieres to promote blockbuster movies. Now, real-estate developers in Australia are using the same tactics to sell glitzy apartments to Asia’s rich.[/b]
Crown Group Holdings recently treated about 1500 guests to an exclusive preview of its yet-to-be-built Sydney residences — a shimmering 20-storey complex dubbed “Infinity” worth about $575 million. Fashion label Armani sponsored the event, Swarovski displayed jewellery and Jack Daniel’s served a limited-edition whiskey.
The extravaganza, repeated in Singapore and Jakarta, helped Crown sell all but two of the development’s 326 apartments in a single day in September.
Among those drawn in by such spectacles are wealthy Chinese, who are helping fuel a residential construction boom that has been shielding the Australian economy from recession as the nation’s long mining boom ends. Cranes dominate skylines above Sydney and Melbourne, which are popular with Asian migrants. Current rules generally only allow foreign investors to buy real estate before construction, typically in apartment developments.
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Cracks are emerging in the market, however. On Friday, the Reserve Bank warned that risks to residential property developers had risen over the past six months, with inner-city Melbourne and Brisbane particularly exposed to a supply glut of apartments.
The central bank has previously warned that any sudden collapse in home prices risks destabilising the nation’s banks and the economy, which grew by just 0.2 per cent in the second quarter from the first, the slowest pace in four years.
“People underestimate how much residential construction has been propping up the economy,” said Warren Hogan, chief economist at ANZ.
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Infinity at Green Square.
Approvals to build new dwellings hit an all-time high in the year through August, as did the number of permits given to build high-rise apartments, which now account for 31 per cent of the total, up from 11 per cent six years ago, according to government data.
China has become the largest source of foreign money flowing into Australian real estate, with Chinese investment in residential property up by more than 60 per cent to $8.7 billion in the year through June 2014, a Credit Suisse analysis of government data shows.
Earlier this year, when Andrew Leoncelli, a managing director at real-estate group CBRE Group, heard that one of China’s wealthiest businessmen was looking for a trophy asset, he knew he had just the right property in Melbourne: Singapore-based World Class Land’s glitzy skyscraper, which is set to become the tallest residential building in the southern hemisphere. His Chinese client snapped up the tower’s highly prized penthouse for $25 million — the most expensive apartment ever sold in Australia. It spans the entire 100th floor and has above-the-cloud views.
Developers such as Crown remain guarded about discussing the importance of Asian buyers for their business at a time of public anxiety over Chinese investment in Australia. But in a sign of their growing sway, Australian architects have begun applying feng-shui designs to cater to Asian tastes. That includes converting swimming pools into “koi ponds” and eliminating the number four — considered unlucky by some Chinese — in floor plans and lifts.
Real-estate agents have set up special concierge services courting Chinese investors. Some work with migration agents based in China and other middlemen to tap into their networks and lure potential buyers. Billboards and videos promoting Australian apartments — in locations such as Sydney’s main airport — are frequently subtitled in Mandarin.
“In this increasingly competitive market, brands need to be smarter if they want to remain attractive to Chinese consumers,” said Brian Buchwald, chief executive at Bomoda, a New York-based strategy consultancy specialising in China.
Australia is now the second-most-popular target market for Chinese property investors after the US, according to search data from Juwai.com, a popular international real-estate portal in China.
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An artist’s impression of the building.
“It’s about location, education and the prospect of maybe being able to migrate here,” said Erin van Tuil, international marketing director at real-estate agency Knight Frank in Sydney.
“What really lures Chinese is that Australia is seen as a safe haven,” said Ms van Tuil, who brought hundreds of plush-toy koalas as a gift to potential buyers at a recent sales event in Beijing.
A sharply weaker currency has added to the appeal. While Australian houses and apartments are increasingly unaffordable to locals, their prices have actually fallen by 13 per cent in Chinese yuan terms over the past year, said Paul Bloxham, chief economist for HSBC in Sydney.
Among the headwinds, however, are slowing population growth and fewer foreign students coming to Australian colleges than expected, removing two key sources of new apartment demand. Local demand is cooling, too, amid a regulatory clampdown on investors buying houses as a bet on rising prices rather than as a place to live.
“By Easter next year it will be quite clear that the housing story will be one of excess, not expansion,” said ANZ’s Mr Hogan. “A key uncertainty is foreign demand.”
Deal makers remain optimistic, however.
“The last six weeks have been breathtaking in terms of just how aggressive Chinese buyers have been to secure our stock,” said Mark Wizel, a senior director at CBRE in Melbourne. “From office buildings to supermarkets, from development sites to strata offices, the Chinese have hit hard on all forms of assets and sent a clear message to the market that they are here to stay.”
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Housing frenzy may be over but the market’s still alive
Turi Condon
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Property Editor
Sydney
[b]It’s the midst of the spring selling season, but the supercharged housing markets are already seeing some of the frenzied buyer behaviour abating. And this week’s home loan rate hikes by the big banks will see the accelerator come off further.[/b]
Last weekend, Sydney’s auction clearance rate of 67 per cent was the lowest in 2½ years, and the country’s biggest residential developer, Stockland, this week flagged it was having to work harder to get contracts signed.
Rather than the housing bubble bursting, the rate rise by the banks should see it deflate.
Nor has it been a raging market for most of the country. Sydney’s housing prices increased 17 per cent in the past 12 months and Melbourne 14 per cent, but across the nation no other capital reached even 5 per cent growth, and in Perth and Darwin prices fell. By yesterday the big four banks had all raised their home loan rates, with Westpac having the largest increase at 20 basis points. On a $300,000 loan the rate hikes will add about $30 a month to repayments. It’s not a lot, but the lower end of the market will feel it most. Both owner occupiers and investors are likely to be less fervent in the hotspot markets of Sydney and Melbourne.
Sydney’s housing price growth could well halve over the next year, and probably should. Eight or 9 per cent price growth would still be a very buoyant market.
The luxury end will be unaffected by the banks’ move, with the low Australian dollar driving expats home and tempting offshore buyers.
The cooling sentiment, though, will work its way into the middle-market hotspots. It may not last for long.
On the one hand the big banks have increased home lending rates, but on the other the Reserve Bank is likely to cut the cash rate, with the futures market expecting a quarter of a per cent cut by March. One may offset the other, depending on how much of an RBA cut is passed on by the banks.
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Buyers' guide to a property market on the turn
NaN of
[img=620x0]http://www.afr.com/content/dam/images/g/k/f/x/x/f/image.related.afrArticleLead.620x350.gkcykf.png/1445585523455.jpg[/img]In Sydney, where auctions are more popular, agents say the slowdown is creating opportunities. Jacky Ghossein
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by Michael Bleby
For all the talk of a slowdown, the property market is still booming. Auction numbers are up across the board, as vendors from Adelaide to Brisbane put their homes up for sale.
Buyers are out in force this spring, the strongest season of the year, despite house price growth halving in Sydney and Melbourne between June and September.
In every city in which auctions play a significant role in home sales – Sydney, Melbourne, Brisbane, Canberra and Adelaide – auction numbers have been higher in each of the last three months than at the same time last year.
But what does the slowdown mean for buyers?
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"Anything that has a negative sentiment, or if there's negative media, presents an opportunity for buyers," says buyer's agent Rich Harvey, the principal of Sydney consultancy Propertybuyer.
"If there's negative sentiment, it translates into vendors having to readjust their expectations on what they're going to achieve in this market."
That's not the case everywhere. Different markets have their own dynamics. But as November, and the second half of the spring season gets going, many potential buyers face the same pressures – to reach a deal and a settlement that will allow them to be in their new home in time for the new school year.
It's the case in Brisbane, where the median house price growth is a pedestrian 0.8 per cent.
"There's a bit of a rush from buyers at the moment," says Meighan Hetherington, director of Brisbane-based Property Pursuit Buyers Agents. "We are seeing multiple offers pushing prices up above what the data would tell us is reasonable value."
In Canberra, by contrast, it hasn't yet reached a furious pace. This is despite the market picking up – detached house prices rose 2.3 per cent in the September quarter, up from 0.2 per cent in June.
"The smart money is buying now, while there's not that panic button among buyers, which gets crazy," says Claire Corby of Capital Buyers Agency.
Adelaide is in a similar position. Buyers still have time to get in ahead of the rush, says Tim Thredgold of real estate agency Toop & Toop.
"In about three weeks' time I reckon [people will be saying] 'Wow, maybe nothing else is going to come on the market, but if it does, we're going to be out chasing it,'" Thredgold says.
So what should buyers do? First, do your homework.
"Make sure your finances are in order, make sure you can come in and drop an unconditional offer – rather than not having done your homework and find someone else gets it at the same price, or even less, because they're unconditional," Thredgold says. "That happens."
Be aware of the way the market works, too. It's common in Queensland (where auctions only account for an estimated seven per cent of sales) for buyers to insert a clause in a sales contract that allows for bank and building inspections. That's different from other states, where prospective buyers do so before making an offer.
"You do have to be able to take the step and enter into a contract with the right clauses that allow the right level of inspection once that's under your control," Hetherington says. "If something comes up that isn't right, you can terminate the contract and get your deposit back."
In Sydney, where auctions are more popular, the slowdown is creating opportunities, Harvey says.
"A lot of agents tell us they used to have 10 bidders and 50, 60 groups going through," he says. "Now they have 10 to 20 groups coming through and two to three bidders. You never know your luck in a big city."
As the pre-Christmas home stretch approaches, market dynamics change. Many people who purchased earlier in spring will by November be trying to sell their own properties by the settlement date they have on their own purchases.
That desperation to sell can give buyers a good deal, says Paul Osborne, the head of Melbourne buyer's consultancy Secret Agent.
"Purchasers have a very good chance before Christmas, where a few owners are quite nervous about holding out for another two months," he says. "A buyer can be very cheeky about where their offer is, where they haven't had that privilege for some time."
Like Harvey, Osborne sees a positive for buyers in the news articles about a slowing market.
"I think we'll actually see a significant amount of stock right at the end of the year," he says.
Not everything will be up for a fire sale, however. Some properties will always be in strong demand. Osborne says good-quality family homes in suburbs with good schools are unlikely to see any let-up in demand, nor are investment apartments in inner suburbs such as Carlton and North Melbourne close to universities and hospitals.
"But equally there will be the other side of the coin ... properties that may have been passed in through November will be open to quite a decent discount on the reserve price to get a transaction," he says.
Christmas is coming, and that may just bring good tidings to buyers.
"We're not in a buyers' market yet in Sydney and we're a way off. It's still in the sellers' favour, but the markets have swung back towards the buyer," Harvey says.
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While super savvy take the Brisbane property line …
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Gillian and Bruce Linton at Kenthurst, northwest of Sydney. ‘When you have Sydney agents telling you to buy elsewhere, you know it’s time to investigate’. Picture: John Feder Source: News Corp Australia
[b]Couples trying to build nest-eggs in Sydney and Melbourne are being priced out of their home cities and are instead looking to Queensland for investment opportunities.[/b]
According to CBRE, more than 25 per cent of apartments sold during southeast Queensland’s high-rise boom have been snapped up by southern buyers, many of whom do not plan to move north.
“Affordability is the main driver for those (buying in Brisbane and Melbourne),” Stockland chief executive Mark Steinert said this week at a roundtable on residential property trends. “You can buy a home in those two corridors for half the price you’d pay in Sydney.”
Among them is semi-retired Bruce Linton, from Kenthurst, about 35km northwest of the Sydney CBD, who told The Australian that, just like first-home buyers, long-term investors were being locked out of the Sydney market.
Like many middle-income earners, Mr Linton had just turned 40 when he realised his superannuation was not going to be enough to give him and his wife, Gillian, the kind of retirement they had hoped for.
Smart decisions over two decades helped build an impressive portfolio across Sydney and Melbourne and, other than a house he had bought for a bargain in the early 2000s at Caloundra on Queensland’s Sunshine Coast, he had no plans to look north.
But by early last year crippling land taxes, demand for hefty deposits and increasingly high asking prices — according to Core Logic’s RP Data, the median price in Sydney for a house is $920,000 and $660,000 for a unit — Mr Linton says he was left with no choice.
“The upfront costs were simply too high ... enough was enough,” he said. “Property spruikers in Sydney began marketing Brisbane properties ... and when you have Sydney agents telling you to buy elsewhere, you know it’s time to investigate other options.”
When he looked at Brisbane, he thought he would buy a house — median price $490,000 — but instead settled on an apartment at Liberte in Kangaroo Point, where the average sale price is $485,000.
Despite the number of cranes across Brisbane’s skyline sparking fears of apartment oversupply, Mr Linton believes that buying in Brisbane is still less of a risk than in any other capital city.
Paul Barratt from CBRE, which is marketing 12 Brisbane high-rise developments, said at least 20 per cent of buyers across the market were from Sydney.
While Brisbane had not seen the kind of price growth Sydney had, vacancy rates were low and rental yields were between 6 per cent and 7 per cent compared with Sydney at 2 per cent to 3 per cent.
Buyers were particularly interested in South Brisbane, which was finally undergoing the kind of urban renewal that had attracted investment in close-to-city suburbs in Sydney and Melbourne a decade ago, he said.
“The transformation of suburbs with proximity to the city ... improving the cafe/restaurant culture, etc, and the capital uplift that comes with it makes all the difference. We lagged behind the other cities for a long time, but we are finally catching up.”
The trend has not been lost on Sydney-based developers who are increasingly looking to Brisbane to develop apartments in a bid to leverage their customer base in Sydney for second and third home purchases.
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Zero deposit loans for Chinese investors to spur Australian property market
NaN of
[img=620x0]http://www.afr.com/content/dam/images/g/k/h/u/g/o/image.related.afrArticleLead.620x350.gkhujs.png/1445763073409.jpg[/img]Ping An and its partner Austpac say the zero-depoist strategy will open Australia investment to a whole new class of Chinese investors. Bloomberg
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by Angus Grigg
One of China's biggest financial institutions is offering zero-deposit home loans for off-the-plan apartments in Melbourne and the Gold Coast, a practice at odds with efforts by Australian regulators to tighten lending standards and cool the property market.
The banking division of PingAn Insurance, which has a listing in Hong Kong, was spruiking the loans to Chinese investors at a conference in Shanghai last week.
"Become an Australian property owner with zero down payment," said one slide displayed at the conference. "Join hands with PingAn and realise your overseas property dream," said another.
PingAn and property marketing group Austpac are offering Chinese investors the zero-down-payment option for apartments in Melbourne's West Brunswick and Hope Island on the Gold Coast.
[img=620x0]http://www.afr.com/content/dam/images/g/k/h/w/2/v/image.imgtype.afrArticleInline.620x0.png/1445740886289.jpg[/img]'The York', a large apartment development in West Brunswick is one of the developments being promoted by PingAn's no-deposit loan offer in Shanghai. Paul Jeffers
"It will open up the Australian property market to a whole new class of investors," said Eddie Yuen, the Shanghai-based manager of Austpac. "Investors may not have the cash now, but they can still buy a property in Australia."
The aggressive lending practices being promoted by PingAn come amid efforts by the Australian Prudential Regulation Authority and the Reserve Bank of Australia to cool the overheated property market.
APRA has forced banks to tighten lending practices for property investors, including tougher income assessments and higher down-payment requirements.
WESTPAC MINIMUM 20PC DOWN
This has seen Westpac double the minimum down payment to 20 per cent for those investing in property.
The other big banks have instituted similar tightening measures, including higher interest rates for investors.
The unusual intervention by APRA came after concerns that more relaxed lending practices were fuelling the east coast property market and had left the banks exposed to significant losses from a correction in the market.
But Australian regulators are powerless to prevent the aggressive lending practices of PingAn or other offshore banks.
The PingAn offering is also at odds with Chinese government efforts to stem capital outflows, as depreciation pressure on the yuan has increased in recent months as the economy slows.
Chinese buyers spent a record $12.4 billion on Australian residential property last financial year after buying around 15 per cent of all new homes, according to an analysis of government data by Credit Suisse.
The investment bank believes this proportion could rise to 25 per cent by 2020.
In recent years Chinese buyers have increasingly looked to Australia as the mainland property market wobbled and many believed the days of big capital gains were over. Australia is the third-most-popular destination for Chinese property buyers, after the United States and Canada.
Scott Kirchner, a director of property agency Bella China, said the zero-deposit loans would mainly be taken up by speculators, rather than those wanting to buy property for their children attending university in Australia or for retirement.
"They are doing this [taking a zero-deposit loan] because they think they are going to get instant capital appreciation," he said. "I don't know why you would do it unless that was the assumption."
LOWER-LEVEL BUYER ATTRACTION
Mr Kirchner said it would also attract lower-level Chinese buyers who might borrow more money than they could afford, while it would also drive up prices.
"If you are opening up the market to another level of buyer then of course it will increase demand and that will flow on to prices," he said.
Mr Kirchner said there was also a risk for developers selling off-the-plan apartments, as some buyers would be tempted to walk away from their initial down payment if prices had not risen at the time of settlement.
Mr Yuen of Austpac said it was early days for the zero-deposit loan, but so far there had been strong interest and if the trial was successful PingAn could roll it out more widely.
He said PingAn would typically lend Chinese investors the 30 per cent required for the down payment and the remainder would be financed by an Australian bank.
"The down payment will typically be secured against an apartment in China," he said.
Mr Yuen said there would be no requirement to disclose the PingAn loan to an Australian bank, which would hold the primary mortgage over the property.
Simon Moreira, a sales manager with R Corp, which is developing the West Brunswick apartments known as "The York", was unaware buyers were being offered zero-deposit loans. "I have got no idea about that," he said by phone from Melbourne.
Mr Moreira said around 80 properties in the 315-apartment development remained unsold and he would be in China shortly to continue the sales push.
PingAn is also offering the zero-down scheme for investors buying into the Ramada serviced apartments at Hope Island on the Gold Coast.
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Laws not keeping up with apartment boom: LaCrosse a rod for Melbourne's back
NaN of
[img=620x0]http://www.afr.com/content/dam/images/g/k/i/y/6/6/image.related.afrArticleLead.620x350.gkippq.png/1445852549953.jpg[/img]Ben Rimmer: The laws have fallen behind housing reality. Graham Tidy
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by Michael Bleby
The country's laws aren't keeping up with the apartment boom that will double the number of strata dwellings by 2030, the peak strata industry body says.
Further, the state-based approach that creates a different system in each jurisdiction also impedes the development of the growing asset class, Strata Community Australia president Erik Adriaanse said.
The reality has hit the City of Melbourne, which ordered owners of apartments in the fire-damaged LaCrosse building in Docklands to cover the cost of making the building compliant with fire laws.
Unable to make a single joint order that covers all the owners and the body corporate, the city had to chase 400 individual owners as far afield as Malaysia, China and Brunei to inform them of the decision. Further, if an individual owner does not pay up, the city has to chase them individually, rather than take action against the owners' corporation.
"The current regulatory system is premised on smaller numbers of apartments or town houses in a single building, and does not allow for a collective approach, which would make this situation easier for all involved," City of Melbourne chief executive Ben Rimmer said. "The legislation has not kept pace with change in building systems and the rapid growth in high rise multi-ownership towers over the past decade."
The country's 2.6-million strata lots, or dwellings, account for 26 per cent of all housing stock, but that will grow to 50 per cent by 2030, Mr Adriaanse said.
NSW, for example, is debating legislation to make it easy to renew ageing building stock, but no other states are making similar moves.
"We are trying to have the rights of certain decisions taken out of legislation such as pets and smoking, to be the decisions made by owners rather than legislation," he said. "It has to be consistent around the country."
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Lending curbs hit property investors, industry survey says
NaN of
[img=620x0]http://www.afr.com/content/dam/images/g/k/b/e/v/r/image.related.afrArticleLead.620x350.gkkd2l.png/1446023780262.jpg[/img]Looking, but not as many buying? Tighter lending curbs are affecting almost one-third of investors, an industry survey shows. Fiona Morris
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by Michael Bleby
Nearly one-third of property investors say recent measures to rein in borrowing through curbs have reduced their ability to secure finance to make a purchase.
A Property Investment Professionals of Australia survey of more than 1000 investors found that 32 per cent said measures such as lower loan-to-value ratios and steeper borrowing costs affected them.
Tighter lending standards have also become the biggest concern for investors and 20 per cent said it was the largest challenge. Fears of a possible correction rated second, as 19 per cent of respondents said it was the top concern. A possible removal of negative gearing came third and 16 per cent said it was the main concern.
Sentiment is also turning more cautious, as 63 per cent of investors said now was a good time to invest in property, down from the 79.6 per cent of respondents who said the same thing at the time of the last survey a year ago.
The survey suggests the long-standing efforts by banking regulator APRA to bring some heat out of the property investment market are working. In August, broker Mortgage Choice said it was seeing no evidence that investors were pulling back. Figures from Fairfax Media-owned Domain Group last week showed house price growth has slowed sharply in Sydney and Melbourne.
PIPA, an industry body founded in 2005 to represent the interests of property investment professionals, said the results showed the need for mature investment.
"While Sydney's housing market has become overheated, savvy investors know there are plenty of markets outside of Sydney where there are still opportunities to be found," chairman Ben Kingsley said.
"And with interest rates still low by historical standards, it is still a good time to invest in the housing market, if you're doing your due diligence and seeking advice from professionals."
Investment intentions are also lower, as 60 per cent of respondents said they were planning to buy property over the next six-to-12 month period, compared with 67.9 per cent a year ago.
Not all investors have been hit by the tightening in lending standards, however. Of the respondents, 37 per cent said the new measures had not affected them. A further 27 per cent were unsure whether it had affected them.
PIPA conducted the online survey of 1063 property investors in September.
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Foreigners buy 20pc of new apartments: NAB property survey
Kylar Loussikian
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Journalist
Sydney
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Assistant Treasurer Kelly O’Dwyer. ‘There will be new penalties for third parties who have breached our foreign investment framework.’ Picture: Jake Sims Source: Supplied
[b]Foreign buyers accounted for one in five new apartments sold in the three months to the end of last month and for almost 15 per cent of new-house sales, according to National Australia Bank’s quarterly residential property survey.[/b]
The figures come as the federal government moves to implement a new penalty regime for those found to have broken regulations around buying existing houses.
Assistant Treasurer Kelly O’Dwyer said legislation before parliament would close loopholes and strengthen the foreign investment framework. “There will be new penalties for third parties who have breached our foreign investment framework ... (including) third parties who knowingly encourage non-resident foreign investors to purchase established property,” she said.
Foreign buyers are allowed to buy new properties, but can own established homes only if they are residents.
The sales figures — taken in a survey of real estate agents, property developers and fund managers — show foreign home buyers were more active in the third quarter of the year compared to the second, with “notable increases” in Victoria and Queensland. NAB chief economist Alan Oster said foreign buyers accounted for one in four new property sales in Victoria.
In established property markets, foreign buyers accounted for about 11.3 per cent of apartment sales and 9.5 per cent of house sales. “Again, these ratios were significantly higher in Victoria, where foreign buyers accounted for around one in five of all established apartment sales and just over one in six houses,” Mr Oster said.
Despite more scrutiny of high-priced sales to foreigners, the report found most — 73 per cent — bought properties worth less than $1 million. About a third bought apartments worth less than $500,000.
In this year’s budget, then treasurer Joe Hockey committed $37m over four years to enable the tax office to track real estate purchases.
The sales results come as Australia’s housing market is expected to soften further, with the same NAB survey showing sentiment souring in most states.
Queensland has overtaken NSW as the most optimistic state and is tipped to lead the country in price and rent growth in the next year.
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Slowing down in boom is better than a collapse after persistent grind...
Housing boom starting to slow: HIA
Adam Creighton
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Economics Correspondent
Sydney
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New dwelling sales. Source: TheAustralian
[b]Australia’s housing boom, which has propped up the economy following the resource boom, shows further signs of petering out with new-home sales dropping sharply in September, extending a downward trend.[/b]
The number of new-home sales dropped a sharp 4 per cent to about 7600 during September, according to a survey of Australia’s biggest home builders — even before the big four banks lifted mortgage lending rates.
“A fresh record level of building activity during this financial year could have been achieved — and could have been of strong benefit to the broader domestic economy — but increasingly restrictive credit conditions are likely to curtail the boom in new home building,” said Housing Industry Association economist Diwa Hopkins.
The monthly pace of home sales peaked in March at 5.2 per cent above last month’s level and has drifted downwards since, a drop the HIA attributes to new prudential restrictions on banks’ investor lending growth that were put in place last December.
Ms Hopkins was confident this year’s construction levels would remain healthy, given the number of new homes and apartments already approved and locked in for construction.
“The deterioration in credit conditions is likely to weigh more heavily on new-home building activity beyond 2015-16” she said.
“There’s still a healthy pipeline locked in this financial year,” she said. “But we have pared back our forecasts for home building next financial year from around 180,000 ... to a little above 170,000, which is still high by historical standards, because of the latest round of mortgage hikes”.
Residential construction activity contributed almost a quarter of Australia’s gross domestic product in the year to June. The Reserve Bank’s ultra-low interest rates have fuelled a record home-building boom, with the number of new houses and apartments being built at an annualised rate of more than 200,000, more than population growth would seem to justify.
House prices in the largest five capital cities rose more than 11 per cent in the year to last month.
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