57% of Brisbane cranes in lender blacklist problem areas
Analysis of RLB's crane index shows about 57 per cent of cranes across Brisbane's skyline are located inside areas flagged by lenders as problem spots with restricted lending.
Nationally some 239 cranes in Sydney, Melbourne, Brisbane, Perth, Gold Coast and Adelaide are within city postcodes that have been marked out by National Australia Bank and AMP where buyers may, if finance is forthcoming, then have to come up with 10% to 20% more equity on settlement.
The apartment settlement risks rise as the off the plan buyers didn't expect and can't match this financing requirement.
Around 38 percent of the cranes building Australia's apartments due for completion in the next two years sit in the postcodes currently known to have been "blacklisted" by lenders.
Sydney and Melbourne have the lowest proportion of cranes in "blacklist" areas, at about 32 per cent each.
In Sydney, where nearly 85 per cent of its cranes were employed on residential projects, the suburbs deemed risky by lenders were spread in a ring stretching from Hurstville in the south through Auburn and Parramatta in the inner west to Epping and Chatswood on the north shore.
Brisbane, with nearly 57 per cent of all cranes located in problem postcodes, ranks the highest ratio of all the cities especially in the north-south spine that includes the Newstead, Fortitude Valley and West End areas.
RLB compared the postcodes of individual crane locations with suburbs singled out by lenders for being riskier places to lend.
Sydney cranes
JLL's national director for Residential Development Valuations & Advisory, Troy Linnane, told The Australian Financial Review that depending on project type, developer and location new apartments sold off the plan late in the cycle had a "higher risk of capital value depreciation".
"These apartments were/are being sold at higher rates per metre due to increases in cost of sale such as agents' commissions, marketing costs, incentives and higher construction costs," Mr Linnane said. "But there are projects and there are projects – so this would not necessarily apply to all, so it does depend on the project – quality and standard of amenity."
Inner Melbourne also shows high numbers of cranes in areas highlighted by NAB (purple) and AMP (blue) but there is a majority outside those postcodes.
"This level of activity and balancing of risk seems to suggest a responsible and sustainable market for the foreseeable future," RLB director of research and development Stephen Ballesty told The Australian Financial Review.
It was noted NAB and AMP together accounted for just under 15 per cent of Australia's total owner-occupier loans and 19 per cent of property loans to investors in October, figures from regulator APRA show.
The banks also have changing lending criteria, their conditions and credit practices change frequently and the timing of projects as well as cycle of the geographic and demographic markets in which they operate mean their risk profiles vary.
The latest report showed the individual crane counts in Brisbane and Melbourne – the two cities most at risk of an oversupply of apartments – falling from the prior count in March.
Brisbane cranes
"It could be that there has been increased investor activity in Brisbane due to the current differential between residential prices particularly when compared to Sydney," Mr Ballesty said.
Perth cranes
Just over half of Perth's cranes were in areas of concern, which included the CBD and city fringe. It was a similar in Adelaide.
Gold Coast had a low proportion of cranes in areas of concern.
Gold Coast cranes
