THE PROPERTY DEVELOPMENT REVIEW
But things are looking brighter in the first home buyer space too, says Staedler. “We’re seeing a key level of stability come back into the market in the last few months,” he says. “We expect that to continue in the next couple of months and then get a bit of a spike in July and August when the tax rates come in.” Despite this potential return of confidence, something will have to give, and the consensus is that lot sizes have to change. “Households are looking at their budget and saying what am I going to give up on, am I giving up on the extra bedroom and extra living space? Or am I going to give up on a bit of land? And that’s really where the market has shifted,” Staedler says. AVJennings chief executive Phil Kearns says it’s a readjustment of expectations, for developer and buyer. “Everyone would like a 600sq m lot, but the reality is that’s not what people can afford, and you have to deliver what they are likely to be able to afford [based on] borrowing capacity.” CHALLENGES FOR DEVELOPERS As Rise Projects recently found out, planning issues and dealing with councils, particularly in the regions, can be troublesome. “I think councils get a lot of blame,” Hayder says. “They deserve some to blame. But in a lot of ways it is the state referral agencies [that are holding things up]. “We have a site, 1222 homes in Penrith, where we have full agreement from the council and from the NSW Department of Planning, everyone involved, that this project is absolutely exactly what [the area] needs. We haven’t had one bit of objection the entire time. “It still took five years and three months to get it rezoned.
“Everyone can be in agreement and it’s just red tape that exists in the planning process. It just takes a tremendous amount of resilience.” Kearns says that this leads to a situation where developers are landbanking. “We talk about hanging on to it, and you will get gains down the track in terms of price increases, but you have got to have a decent sized balance sheet to be able to sit on 750 lots for a long period of time,” he says. “That’s a lot of capital tied up. So where do I most effectively put my capital? If I’ve got to sell a site here or there … then that’s what I’ll do.” Sheargold says that these challenges could provide major opportunities.
The ABS says 23,597 new private houses commenced in the final quarter of 2023, a decline of 14.9 per cent on the same period the previous year.
“The next five to 10 years is going to be a really good time for us if we can see some of these planning issues through ... the best areas to try and buy obviously, outskirts of Sydney, Melbourne, and Brisbane. And they’re the hardest places to buy. We’re just still being conservative with our capital, not rushing out to buy anything.” Staedler says that the Australian dream is still in place “but it needs to be reimagined again.” “The three or four-bedroom house on a 500sq m block isn’t feasible, particularly in Sydney. It is a townhouse. It’s a small level product. It’s an apartment in Western Sydney. “There’s no silver bullet. It’s social housing, affordable housing, it’s build-to-rent, it’s private and public collaboration that needs to be done.”
Sheargold, founded in 1963 by Roy Sheargold, has worked on 70 projects across the southern half of NSW.
June / July 2024 – 19
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