There’s a continuing stream of troubling information coming in for the Australian apartment market, which economists have long been warning is primed for a downturn.
Price falls in the wake of Brisbane’s apartment construction-boom have claimed a number of victims this year, as apartments purchased off the plan sell for losses of as much as 36%, according to a report in The Australian today.
Queensland’s apartment market has been a rising concern, with dozens of construction companies having collapsed already this year.
Today, it emerged ANZ had issued an extensive list of suburbs in and around Brisbane and Perth that will be subject to stricter lending requirements for borrowers.
Under the bank’s tougher loan terms for the troubled apartment market, ANZ will enforce a minimum deposit of at least 20%, according to a report in the AFR.
(Tougher loan terms signal the bank is concerned about risk exposure on current settings.)
The recent price falls are reflective of concerns that have been on the radar of policy makers for some time. Last October, the RBA flagged potential issues with the Brisbane and Melbourne apartment markets given the ongoing wave of new supply in those locations.
The Australian reported that most of the apartments in three towers built around five years ago — situated in Hamilton, Bowen Hills and Fortitude Valley — had sold at a loss this year.
The price falls come with 5,300 apartments completed in Brisbane this year and a further 11,000 under construction.
While new apartments continue to go up, a number of cracks have been appearing in Queensland’s construction industry.
A report last month showed that more than 30 construction companies in Queensland have collapsed this year, with more than 400 additional builders at risk of failure.
Among the heaviest losses for apartments sold this year, the biggest drop was for a two-bedroom apartment in Hamilton which was sold for $370,000 — $152,000 less than original price of $522,000.
Meanwhile, ANZ has issued a list of postcodes in Brisbane and Perth where it will impose stricter lending standards given the risks around over-supply and falling prices.
Along with the list, the bank also issued a 10-page guide to mortgage brokers clarifying the “minimum requirements and guiding principals” that brokers should abide by when arranging loan applications.
The move appears to be in response to a report two weeks ago by investment bank UBS, which estimated that around $500 billion worth of Australian mortgage applications contained factual inaccuracies.
That analysis showed the number of incorrect applications at ANZ was higher at a “statistically significant” level compared to the 2017 industry average.
Weekly preliminary data from CoreLogic this morning showed that auction clearance rates remained steady in Sydney and Melbourne last week, but remain lower than at this time last year.
The figures showed that Brisbane and Perth had the lowest preliminary clearance rates, at 51.5% and 36% respectively.