Demand tipped to flow through to outer suburbs

Developers are confident that improving demand for established housing stock will ripple out to the outer suburbs.

Andrew Whitson, Stockland’s group executive and CEO communities

Developers are confident that improving demand for established housing stock will ripple out to the outer suburbs where house and land packages are popular.

Several developers reported lower than expected new home sales during the 2018-19 financial year. Stockland’s group executive and CEO communities, Andrew Whitson, said the declines were linked to the 2018 calendar year, when falling prices and higher interest rates made buyers cautious.

But a noted rise in sentiment and emerging FOMO (the fear of missing out) demand gripping the market on the back of changed credit conditions has made developers more confident in the year ahead.

“We saw Sydney and Melbourne respond with sales volume almost immediately post the federal election. New inquiry spiked in the second half of May into June and July, then moderated a little but was still well above levels pre-election,” Mr Whitson said.

“We expect that to continue and the price growth we’re seeing in the established market is rippling out to the outer suburbs into the vacant land market as well.”

Lendlease is optimistic of a mild 2020 recovery, but says borrowing capacity would be a constraint for new home buyers.

Perth-based Cedar Woods has seen a 30 per cent rise in inquiries on some projects in the first quarter of the financial year. The east coast is offering the greatest returns for the developer, with the sharper than expected recovery boding well for sales in the medium term.

Cedar Woods managing director Nathan Blackburn said while a recovery was evident, partly through the pre-sales on its residential apartment tower at Clayton, he said buyers were more switched on. However, they were cautious and “more discerning”.