March, 26, 2010

AS POLICYMAKERS cry out about the urgent need for housing to cope with population growth, residential developments in Australia have stalled or been shelved.The big four banks - now the dominant players in the property-lending market since the withdrawal of smaller lenders - have strict lending conditions that make it at times impossible to get projects started.These conditions are increasing the gap between supply and demand and, in addition to lengthy and costly local and state planning processes, contribute to the reasons why house prices are going up.

Banks now require 60 to 80 per cent pre-sale before they fund residential developments.In the apartment sector, pre-sale requirements, which used to be 50-60 per cent, are now as high as 90-95 per cent. And it's not the big end of town that's hurting. It's predominantly the small and medium-density residential builders/developers who, until now, had relied on smaller lenders for money.

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