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 Home    2018. It had to happen!

Hi All

Sorry it has been so long since posting any content. I’ve been a bit busy working on other projects within Jandson so the content has suffered a bit unfortunately but I plan to get back into the saddle 2019:)

So, what a year! As the title suggests, its no secret that we have seen softening of the market and to all who has been in the industry long enough it came as no surprise. After 5 years of phenomenal growth the bubble has finally burst and we are now seeing a “normal” market emerging…..and I use that term loosely. I was at a conference 3 months ago and a very prominent real estate agent was very hesitant to use the term “normalised market” because what is normalised? Its all relevant to the current economic climate. I would suggest that what might have been considered “normalised” 5 years ago is no way relevant today with what the market has just experienced.

So you ask, where is the market going now and is it as bad as the media is suggesting? Let me start by saying, the media a have a lot to answer for in terms of scare mongering. “Never let the facts get in the way of a good story” comes to mind when addressing the media’s take on the real estate market. Data and statistics are easily manipulated to suit a purpose and if that purpose is to slow the market down then they have certainly achieved that!!! Don’t believe everything you read or hear. That’s all I’m going to say on that matter.

Where is the marketing heading? To be honest there is a general consensus within the industry that we will see a further 6-8 months of static growth then we should see the market start to climb back with a healthy growth rate. I don’t believe we will see 2014-2016 figures but a healthy rate nevertheless. Obviously we have an election and the possibility of interest rates rising in 2019 so they will certainly be contributing factors but the major issue that needs to be addressed, I believe, is softening of the lending criteria by the banks. The interim report for the Financial Services Royal Commission states banks, generally speaking, were not qualifying clients correctly. APRA has similar findings and have been trying to stem the amount of over zealous lending since 2014. I agree there needs to be stricter guidelines when qualifying a potential borrower but the banks have taken it to the extreme where people who normally would have been able to borrow “x” amount are now being turned away simply because they don’t meet the new lending standards. A July 2018 article by Jonathan Chancellor from the Daily Telegraph shed some interesting facts on just how much these standards have been raised since 2014. “Macquarie undertakes its annual mortgage “mystery shopping” exercise where Macquarie analysts pose as potential customers at ANZ, Commonwealth Bank, NAB, Westpac, Bankwest, Bendigo and Adelaide Bank, Bank of Queensland, Suncorp and St George.

They found that banks had tightened their credit standards by a further 5 per cent over the past year as a result of policy changes.

From the peak of mortgage activity in 2015, borrower capacity fell by 13 per cent for owner-occupiers and 22 per cent for investors.

Buying a typical Sydney house usually requires a 20 per cent deposit, which can often be $200,000 or more.

Buying a typical Sydney house usually requires a 20 per cent deposit, which can often be $200,000 or more. Source: https://www.realestate.com.au/news/reality-behind-banks-strict-lending-criteria/

The survey found some banks were willing to lend up to $1 million to a property investor earning $105,000 a year, but typically less than $600,000 to an owner-occupier on the same income. The average loan capacity for owner-occupiers fell from $700,000 in 2015 to $600,000 presently, while average loan capacity for investors fell from $1 million to $800,000.”

This will be the biggest hurdle faced by the First Home Buyer and most certainly the Investor come 2019-2020. There are rumblings through the banking sector that we will see a softening of the current criteria over the next 6-8 months but only time will tell. It certainly needs to addressed if we are to see any growth back into the NSW market.

So where does that leave Jandson at the end of 2018 and whats new for 2019. Well whilst we have seen a drop in sales, particularly in the house and land package market, we have a number of projects that will have us in construction well into 2019 and early 2020. We have seen a jump in contract sales and KDRB (Knock Down Rebuilds) which is great so there are still people out there willing to build. We just need the banks to come to party. To say its been an interesting year is an understatement and whilst we still forecast a further 6-8 months of average sales, the horizon looks good. We have a number of projects we have been working on with developers that will continue to foster the great relationships we have with companies such as Lend Lease, Crownland Developments, PCL Corp, Vantage Property, Goldmate, Dahua Group just to name a few.

The staff have been absolutely working their tails off this year and are going to have an extremely well deserved Christmas break. With over 15 handovers in the last 3-4 weeks, we have some very happy clients in for Christmas and some very exhausted supervisors and client coordinators.

I look forward to posting much more content next year and from everyone at Jandson we wish you a fantastic Christmas and a safe, prosperous 2019.

Cheers

Scott

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