Mirvac cautions over high interest rates even as capital city sales fly

As it tops out its latest Sydney apartment project, the developer says new migrants are buying inner city properties at a faster rate.

Mirvac's head of residential, Stuart Penklis.

Property developer Mirvac has warned that interest rate rises are dampening sentiment, particularly for housing estates, but says it is forging ahead with inner-city apartment projects where strong demand has driven price rises.

The property industry has been hit by repeated rate increases, but the cocktail of rising input prices, builder collapses and higher immigration had led to a surge in demand for quality high rise apartments.

Mirvac on Tuesday topped out the main structures of three new apartment buildings at Green Square in Sydney’s Zetland, signalling the near completion of 311 new units.

The overall urban renewal project is seen as a model for taking an underused site and transforming it into a new precinct with thousands of homes.

Mirvac chief executive, development Stuart Penklis said Green Square was being redeveloped from one of the city’s oldest industrial suburbs to Sydney’s first new town centre in more than a century.

The area already has about 1000 apartments and more are in planning after the regeneration was kicked off by NSW government body Landcom.

Mr Penklis said the three apartment buildings were more than 80 per cent sold, mainly to owner-occupiers, young first-home buyers and investors.

“As our national immigration rates return to pre-Covid levels, and with national unemployment rates at a near 50-year low, we are seeing buyers acting decisively in the tightening market to secure quality, larger apartments, setting themselves up for future growth,” he said.

He said there was price growth for well-located apartments in large cities, with Mirvac also seeing the trend in Brisbane and Melbourne, where it had launched projects. High migration was also converting into sales more rapidly than expected.

“As people move to Australia, they’re opting to buy sooner than what they would normally have bought in previous periods,” Mr Penklis said.

“Over the last few months, on average, we’ve seen about a 6 per cent increase in prices.”

But the overall market was being tempered by rate rises, “particularly in masterplanned communities”. Sentiment had been affected in inner and middle ring locations, but he said the low levels of new supply meant there was still healthy demand.

Originally published as Mirvac cautions over high interest rates even as capital city sales fly