Apartment buyer kickbacks set to rise as credit crunch nears

first_imgInner-ring suburbs were definite targets for the credit crunch but high apartment supply was also exposing the middle ring. Picture: Jodie RichterBRISBANE apartment buyers are in the “boxseat” for kickbacks as a looming credit crunch sees developers warned to go all out to ensure contracts don’t fall over.This as a dozen Brisbane postcodes were named in a lender’s blacklist, which included bluechips like Hamilton, New Farm, South Brisbane and Brisbane City.Prominent corporate recovery firm Ferrier Hodgson warned that “crunch time looms” for the Brisbane apartment market, advising funding partners and developers to prepare for multiple scenarios.“With all the headwinds facing the residential apartment sector in Brisbane, we anticipate sales prices for new apartments will decline, as will sales volumes for off-the-plan apartments, with settlement risk being a significant concern,” Ferrier Hodgson’s new report on the Brisbane apartment sector said. Million dollar sales at record levels Fainga’a brothers sell Brisbane Home More from newsMould, age, not enough to stop 17 bidders fighting for this home2 hours agoBuyers ‘crazy’ not to take govt freebies, says 28-yr-old investor2 hours ago Get The Courier-Mail’s real estate news in your inbox FREE Inner-ring suburbs were definite targets for the crunch, but the contagion was expected to spread to the middle ring because of the high level of apartment supply going in.“While inner city areas such as Newstead and Fortitude Valley, West End and South Brisbane will face these pressures, we have heightened concerns for developers and financiers with exposure to middle ring suburban areas such as Albion, Nundah, Cannon Hill and Chermside where significant apartment projects are completing now and throughout the rest of 2017,” the report said.“Financiers exposed to the larger residential projects in this sector need to be prepared to work closely with developers where they have an exposure to mitigate the risk of loss.”Developers were going to great lengths to keep investors on side, drawing on an array of incentives to drive up tenants for newly finished buildings, including up to four months rent free to secure 12 month leases.“This is to fill vacancies during 2017 and into 2018 where rental guarantees have been offered to investors by developers, as part of their purchase.”In the arsenal developers have been advised to consider “monetary incentive to settle rather than default”, helping buyers obtain loans, finding alternate buyers early, giving buyers extra time to settle, looking at first and second mortgages and in worst case scenarios, terminating contracts and pursuing buyers for any shortfall.Lenders have responded by creating multiple classes of borrowers, with some of Brisbane’s most affluent suburbs on lending blacklists — where they would be forced to pay higher deposits and face more conservative apartment valuations.last_img

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