The correction is deeper than the official data shows. Prices are down around 3% nationally, but on the deals we’re seeing, the top end has likely fallen 15 to 20%, and the middle of the Sydney and Melbourne market around 10% from market peak.
I don’t expect a GFC-style credit freeze. But a softer credit crunch is starting to move through the system: money is still available, but it is dearer, slower and more selective. I expect property development finance to be hit hardest, which will worsen undersupply.
Watch the interview with Ausbiz
In my view, the case for developing hasn’t been this weak in 30 years. There is another side to this. As banks tighten their credit policies, deals they would normally fund are coming to private credit lenders instead. That makes how each loan is structured matter more than ever.
Disclaimer
Msquared Capital Pty Ltd ACN 622 507 297 AFSL 520293. The information provided is general in nature and reflects the views of the speaker at the time of recording. Forward-looking information is inherently uncertain, and actual results may differ materially from projections. The information has been prepared without taking into account your objectives, financial situation or needs, and does not constitute personal financial product advice, investment advice or a recommendation. Before making any investment decision, you should consider whether the information is appropriate to your circumstances and seek independent financial advice.
