Apartment lender AMP ‘blacklists’ more than 140 suburbs

Marty , how long is that likely to take , and if it happens how long is it likely to take to filter through to a down turn in construction in those recognized high risk areas ?

Cliff

 

38 of the Qld suburbs listed are in Cairns and surrounds, no surprises there.
Since 2008 very few units have been built in Cairns, a massive building boom occurred in the mid 2000s when new developments went up everywhere.
No Where was hit as hard by the GFC as several thousand trades people left town and unemployment reached double figures.

Excess unit supply has now been adsorbed with low vacancy rates and rising rents, the problem is outrageous body corporate fees caused by massive increases in insurance premiums. The unit market is quite large and is driven to a large degree by investors who left the market totally. A 9% gross yield in the space of 12 months became a net yield of approximately 4%, unattractive for investors and very expensive for OOs, units became difficult to offload and prices dropped sharply.
That probably explains the reason for the blacklisting.

 

Good observations there Hugh, backed up by the numbers (see below). Looks like it'll work out for the best.

http://www.qgso.qld.gov.au/products...ity-lga/res-land-dwelling-activity-cairns.pdf

 

I find it interesting that the CBD of pretty much every city is included. I guess it comes down to the supply but interesting either way.

 

I'm surprised Sydney CBD included , Rocks etc .

Zetland I can understand .

I find in interesting in Brisbane that some of the central suburbs are listed and others not .

Teneriffe & Newstead which also have lots of new construction going on and recently completed aren't .

Cliff

 

Demographics Cliff, less students/transient population and more working professionals without kids, from memory the median age of owner occupiers is younger than other inner city suburbs.

The rapid gentrification process (as you've seen) and still plenty of demand. Anecdotally I rate Teneriffe through to Hamilton (and soon Nundah) as one of the trendiest pockets of Brisbane for the under 40's.

 

Hi Cliff,

My tip is cba is loading up on investment loans now (hence the blow out in turn around times) in preparation of tightening policy so that they can say to APRA yes Sir we are complying (while still getting their 10% pa growth).

I think it is a bit like a domino effect when the pool gets smaller the remaining lenders get more and more of the same sort of business and eventually they fall into line.

Maybe I'm being overly pessimistic I certainly wouldn't want to be trying to settle an OTF purchase in 6-12 months time with less than 30% deposit available.

 

i think the article is a bit stupid in regards to sydney cbd..
how can it be viewed as 'high risk' when you have huge benefits of being in the centre of the business district and get the benefits of the existing rail + new light rail connecting to the east + the new proposed metro line...

how can they not put parramatta up there lol for example..

 

Your nickname will give you a bit of a hint, students packed 4-8 into a bedroom, living on kimchi, cup noodles and imported cigarettes will make the oversupplied CBD apartments the shiny new slums of tomorrow.

But the positive, we get to say we have "world cities" and can get that Marrickville bathroom renovation tiled for $15/hr.

 

In the docklands early 2000's lots of otp purchases got caught. Vals came in short, purchasers had to fire sale when they couldn't get finance. Valuers used the fire sale prices in their comparables. Then lenders start reducing lvrs, or not lending to certain developments, or capping their lending to a percentage of any one building, bringing more purchasers down.

I haven't got examples of commercial finance or development finance then being impacted directly. but supply and demand would mean there's less profit in new developments after these sort of squeezes, and banks criteria would be harder to meet, even if development lending policies didn't change.

The Gold Coast would have quite a few such cycles over the last 40 years I reckon.