Triguboff predicts more buyers will forfeit their unit deposits

Australia’s biggest apartment builder Harry Triguboff’s Meriton is expecting more buyers to forfeit their deposits.

‘We read every day how prices in Sydney have gone up’: Harry Triguboff. Picture: Jerad Williams

Australia’s biggest apartment builder, Harry Triguboff’s Meriton, is expecting more buyers to forfeit their deposits and fail to ­settle off-the-plan units, saying the strong rate of settlements so far had been underpinned by two years of ­surging prices.

The rapid price growth, largely in Sydney and Melbourne, had now come to end, said the founder of apartment builder Meriton Group and Australia’s richest man. “The ones who are settling now have made a lot of money; building on those apartments started two years ago,” Mr Triguboff told The Australian, noting the contract price was struck at that time. “We read every day how prices in Sydney have gone up by 10 per cent in the last year.

“They have not gone up in the last six months.’’

However, he noted that prices were not falling and rents remained resilient.

A report released yesterday by researcher CoreLogic found that Sydney unit rents had increased by 1.8 per cent from a year ago, but slid 0.7 per cent over the last quarter, while apartment rents were flat or easing in other capitals.

The Reserve Bank, which this week kept interest rates on hold at 1.5 per cent, again flagged the “considerable supply” of apartments being developed in eastern state capitals, but noted housing price growth and lending growth were slowing.

Yesterday, international real estate agency Knight Frank said Australia had slipped down the ranks of world hot spots for housing price growth, falling from sixth place a year ago with an 8.7 per cent annual price rise, to 16th (a 6.8 per cent price increase) as the east coast housing boom deflates.

Turkey, followed by New Zealand and Canada, saw the strongest price growth last year.

It was the next wave of apartment development, at a time of waning price growth, that carried the real risk of settlement defaults, Mr Triguboff said.

Chinese buyers in particular are being challenged as banks tighten funding and the Chinese government restricts money flowing out of the country.

“Let’s face it, they (local and mainland Chinese) are the only buyers.”

Mr Triguboff said he was surprised that buyer demand had continued to be so strong, with the company selling 125 units — more than half — at the first release in its Pagewood Green project in Sydney’s eastern suburbs and ­realising $140 million at the weekend launch earlier this month.

He shrugged off the impact of defaults, saying Meriton had seen only a very small number of defaults and he could keep any such apartments.

Mr Triguboff owns about 7000 apartments. They are a mix of rental units and serviced apartments that are held as family ­investments.

The surging prices of the past three years came after 10 years of stagnation in Sydney’s housing market, he said.

That pent-up demand then ­fuelled what Mr Triguboff has previously described as the biggest boom he had seen.

“A lot of developers jumped in when land was cheap and made 30, 40 per cent profit,” he said.

While Meriton had not seen sites in receivership, Mr Triguboff said he was expecting this over the next few years.