The battle being waged by Australia’s prudential regulator, APRA, to rein in investment lend, property speculation and take the air out of the east coast property bubble is working according to Mark Steinert CEO of Stockland Australia’s biggest residential property developer.
Steinert told The Australian that APRA’s actions to cap investment lending at a speed limit of 10% have seen funding dry up for mid-tier developers. That’s meant that projects have begun to stall and partially developed sites are now available.
That’s problematic for the developers. But, Steinert said it’s good news for the market because it diminishes the potential for an end of cycle supply overhang in Sydney and Melbourne.
“A lot of the supply that potentially could cause a problem is not going to be built this cycle because developers won’t get the funding,” he said.
But, Steinert stressed that outside of Sydney and Melbourne the cycle hadn’t been particularly strong in the context of the past 30 years and said, “in most (other) markets, price growth has been 3-4 per cent (a year) — that’s about the same as inflation and population growth.”
That means Stockland, which plans to develop 32,700 dwellings in the next two years, has a benign outlook for the economy and Steinert said there will be no pop of the housing bubble and “definitely no recession.”
Steinert added that Stockland operates, “in every market in the country and they are all showing some level of growth, so I don’t see what would create this recession in Australia without some external shock.”
According to Steiner the two potential shocks on Stockland’s radar are the impact of a Chinese shock, which could be a wild card, and “a collapse in migration” which he said “is what underpins the economy”.
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