SYDNEY is being shunned. The big residential developers are pinning hopes of future profits on Melbourne, Perth and Adelaide. Brisbane has also fallen out of favour.Researchers constantly identify Sydney as the city of opportunity due to a undersupply of housing and rising prices, but the city’s costs are high, it is being stung by a new state tax and it is looking less like a short-term profit centre for developers, with the result that the undersupply looks set to worsen, The Australian reported.
Stockland’s investor update yesterday focused on recasting its product to the affordable end of the market, and on the boom market of Melbourne. Australia’s biggest residential developer also announced $250 million of new land acquisitions, in Victoria and WA.They will generate 4750 new housing lots. There were no announcements of new Sydney sites.Billionaire developer Lang Walker is focusing on Adelaide and Melbourne, and many other big developers are treading a similar path.
David Keir, the new chief executive of Queensland-based residential developer Devine, said it was looking for new sites in Victoria, Adelaide and some Queensland regional centres such as Gladstone and Townsville. Three to four new site purchases are under “serious consideration”, Keir says. Melbourne’s raw land prices have surged — Keir notes prices increased from between $600,000 and $800,000 a hectare to $1.2m a hectare over a six- to nine-month period — but it is still one of the most desirable markets.
Developers do not seem fazed that worsening affordability may crimp demand in Victoria. There will be some respite, with the state government widening the city’s urban growth boundaries. The Housing Industry Association and Commonwealth Bank housing affordability index released this week showed Victorian property slipping from the grasp of many prospective home owners.
Housing affordability in Melbourne and regional Victoria worsened 10 per cent and 16 per cent respectively for the March quarter, compared with 4 per cent nationally. Despite this, one startling figure in Stockland’s market presentation yesterday will override many concerns.