Builders say it's getting more difficult to shift apartments even as rents rise
Some of Australia’s largest developers say it’s getting harder to sell off-the-plan units.
Meriton managing director Harry Triguboff told The Australian that while rents were rising on a weekly basis, it was getting more and more difficult to sell apartments.
In Surfers Paradise, apartment sale prices are falling about 5%, but developers told the publication that in the boom preceding 2022 they had made money.
Mirvac’s home sales in the September quarter were at less than half the level posted past year. The developer sold only 415 lots during the three months to Sept. 20, compared to 902 lots sold in the same period in 2021. Rival developer Stockland also saw lower sales in its housing estates, driven by lower consumer sentiment, The Australian reported.
Andrew Antonas, managing director of Matrix Property, which specialises in selling commercial apartment sites to developers, said builders are concerned about the future.
“We are going into a long period of two years of no significant price gains and no price falls,” Antonas told The Australian. “It will be a static market for two years. There’s financial stress on off-the-plan developments, and construction prices have gone up 40%.”
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Brad Caldwell-Eyles, CEO of 1st City Projects in Sydney’s east, told the publication that his company’s 2021 revenue equalled that of 2017, 2018 and 2019 combined – but 2022 will be leaner than last year.
“We are tracking to do 60% of what we did in 2021, which was exceptional,” Caldwell-Eyles said. “You can’t have blowout years forever.”
Caldwell-Eyles said the downsizer market has slowed, and selling in the $4-$8 million range is difficult. He said while commission-only agents are likely to keep their jobs, support staff might have to be cut as the market worsens, although he hadn’t heard of any redundancies yet.
“We are getting inquiries, but [sales] conversion is tougher,” he told The Australian. “Lead times to deals are longer.”
Peter Chitetnden, principal of Woodhill Estates, said inquiries were still coming in. Like Triguboff, Chittenden said rents were increasing. He added that while there was less stock, pre-sales were not at the same levels they were 12 months ago.
“There’s good property in the market, inquiry is still there – it’s more inquisitive than performing,” he said.
