Erskineville developer sees apartment settlement problems with bank lending

Erskineville developer sees apartment settlement problems with bank lending
Erskineville developer sees apartment settlement problems with bank lending

An undisclosed developer in Erskineville in Sydney's inner-west has told the Australian Financial Review that an increasing number of her clients were getting knock backs from banks, even though they were pre-approved to buy apartments.

"Even with buyers who can pay, the banks are changing their minds, so of course there'll be a settlement problem," she said.

"If bank policies are consistent, they should honour what they have agreed to lend."

The developer said the local market was "fast retreating" as banks rein in their lending.

Overseas demand is still strong, but banks were stepping up their limits on those sales to as low 10 to 30 per cent.

It reported newly arrived migrants, who are one of the biggest groups of buyers, were being rejected because they have either little wage history or very new businesses.

"It doesn't make sense. The government and economists talk about growing population to fuel demand. But that demand is made up of new migrant families and business migrants who need homes.

"Of course they don't have much credit history in Australia."

The developer said the banks had mitigated their risks by reducing loan valuation ratios to about 70 to 80 percent. 

Jonathan Chancellor

Jonathan Chancellor

Jonathan Chancellor is one of Australia's most respected property journalists, having been at the top of the game since the early 1980s. Jonathan co-founded the property industry website Property Observer and has written for national and international publications.

Tags: 
Property Development Erskineville

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