All sunshine and lollipops?

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While Bill Shorten is becoming ‘he who shall not be named’ within the property industry, GPS has seen one positive legacy.

The prospect of polices such as ‘franking credits’ being implemented caused many self-funded retirees to review their investment portfolios. They moved away from being centric in equities and embraced other classes of investments. Such as cash investments offered by GPS.

Since the federal election GPS has experienced a surge of new investors and more funds from existing investors. If other non-bank lenders are experiencing the same phenomenon, then there should be more development finance available to fill the gap left by the withdrawal of the banks.

If you believe the media, property prices have bottomed, over supply in South East Queensland has been absorbed, banks have loosened the purse springs for buyers and property prices will soon be on the way up.

It all sounds like sunshine and lollipop. Now for some sobering news.

There are not a lot of non-banks left who have been around for 25+ years. GPS represents only a fraction of development lending. Even if we wanted to grow our businesses and could raise the investment monies, we don’t have the resources to grow to a size capable of filing the gap left by the banks. The credit crunch for development finance looks like it will continue, with no signs of a return by the banks.

Valuers are being even more conservative. More equity is required for a project to proceed.

Local authorities are being more officious. This appears to be a consequence of many factors including changes in leadership, Mascot Towers, CCC Investigations and flammable cladding. It is never good when a local authority team with ‘task force’ in its title gets involved.

Overall, I see that it is just going to be more of the same in the residential development market in South East Queensland. There will be positive factors and there will be negative factors.

Richard Woodhead – Managing Director

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