New Developments Update
David Shearer - Director Residential Developments
With chaos and uncertainty rife in the world’s largest housing market - over in the USA - it is not unreasonable for people here in Australia to expect or believe fallout from these events may cause property values to drop here in Australia, as they have in certain markets in the USA. If the housing finance markets here and in the USA were at all comparable, then I would be inclined to agree. Thankfully however, they are not at all comparable.
The catalyst for the troubles in the USA stems from non-conforming (sub-prime) loans, and more importantly from the large percentage of these loans that make up the mortgage market in the USA. Depending on what media reports you read, these non-conforming or ‘sub-prime’ mortgages make up around 10% of all USA mortgages. Currently around 7% of all USA mortgages are in default, most of which fall into the non-conforming or ‘sub-prime’ loan category.
A non-conforming loan is a loan whereby the criteria to qualify is relaxed, or simply ignored. Such loans are all but non-existent in Australia, with ‘Lowdoc’ (low documentation) loans making up less than 1% of all Australian mortgages. The following criteria is what is normally required to secure housing finance:
- An independent valuation on the property to determine the security being offered for the mortgage lender, and to confirm that the sale price is comparable within the area and type of property.
- The Borrower must have 2 years prior proof of income at a level that will see them well able to make repayments, even if mortgage rates rise, and a solid history of continual employment
- Cash deposit of at least 5% or security in the form of another property
- Clean report on the borrower from the Credit Reference Association (CRA)
Such situations appear to be all but the norm for non-conforming loans in the US. It’s really no wonder it has all gone bad.
The Australian mortgage lending industry knocks back many people who want to buy a home because they don’t meet the strict lending criteria. This may seem tough, but this has ensured the underlying value of property in Australia is protected from the crisis now occurring in the USA. Australians love to kick the banks for being too hard and too profitable, yet we can thank the fact our banks are profitable and they have strict lending criteria for the insulation provided to property owners and the inherent value in property.
Australian property has been shielded from the events occurring overseas. Nothing has changed to solve the still-dire shortage of rental accommodation which is driving rents skywards. Here in Canberra, this is reaching a critical level. We desperately need more new apartments and townhouses to fill this demand.
We hope to address this massive undersupply with the ‘off the plan’ sale of 2 new apartment developments from two of Canberra’s leading developers of residential apartments. Both are expected in November this year. The architects and designers involved in both projects have excelled in creating iconic buildings which represent the leading edge in sustainable design and plan for a more energy-efficient future.
‘Axis’ in Lyneham will offer an incredible variety of 1, 2 and 3 bedroom apartments, amongst its 3 distinctive towers. All just a short stroll from the cafés and restaurants of Dickson, and so close to the City. ‘Axis’ will lift the standard again by which city-edge apartments are judged.
‘Altitude’ in Belconnen is an 18-storey apartment building to be built on the promenade of Lake Ginninderra and will offer wide sweeping views from many of its 1, 2 and 3 bedroom apartments, with the penthouse level offering a level of luxury and prestige never before offered in Belconnen. ‘Altitude’ will offer its residents a level of design and finish well beyond that on offer currently anywhere within Belconnen.
If you are interested in purchasing an apartment off plan to secure a future investment or to experience the lifestyle benefits of apartment living, then contact Independent Property Group today to discuss a property suitable for you from the range of properties we currently have listed for sale.