Apartment oversupply overstated as many projects won't take off due to lack of financing: iBuyNew CEO

Apartment oversupply overstated as many projects won't take off due to lack of financing: iBuyNew CEO
Apartment oversupply overstated as many projects won't take off due to lack of financing: iBuyNew CEO

The buzz around an oversupply of new apartments in Australia is exaggerated as many of the proposed developments will never eventuate because of financing problems, says online property agency iBuyNew, which specialises in off-the-plan properties.

Chief executive of iBuyNew, Mark Mendel, said many developers with approvals in place for apartment complexes will not complete the project because they are unable to obtain finance.

“While there is a lot discussion about banks toughening their lending policies for buyers, they are even tougher on developers,” Mendel said.

“Developers with no track record are getting a blanket ‘no’ from lenders across the board, while those with a limited track record are also finding it extremely tough.”

Mendel said the generalisation that Australia had an oversupply of apartments was too simple and one needed to look at the specifics of each state, region and suburb.

“There are definitely pockets of Brisbane, Melbourne and Sydney that may experience an oversupply of apartments.

‘But if you look at Zetland/Waterloo in Sydney’s inner south where thousands of new apartments have been built over the last five years, everyone expected an oversupply but capital growth has still been more than 10 per cent in the last 12 months.”

Mendel said South East Queensland was going through a massive transformation.

“This is becoming an international region with infrastructure developments such as the new $2 billion casino in Brisbane as well as the Gold Coast hosting the Commonwealth Games in 2018,” he said.

According to Mendel, the infrastructure boom will change the way the world sees Brisbane and South East Queensland in future. 

 

Tags: 
Oversupply Apartments

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