Loan pipeline at GPS is the strongest I have seen it. I have never been able to sit back at the end of September knowing that I have enough accepted deals to see GPS through to the end of the calendar year.
However, sitting back is not in my nature. The property market in Brisbane is entering a new phase and I am still looking for new deals so we can offer GPS investors the best that is available.
As we have been through (and come through) all phases of the property market many times, the senior level at GPS also knows that it is not the time to sit back. Our valuers are now being more conservative (around 7% lower) and credit has tightened.
Ben O’Hara and Matt Buckley from our credit team recently sat the GPS lending team down in the boardroom and went through what credit is now looking for in deals.
The rejection rate of deals has increased. Due to the pullback by the banks, GPS remains in a very good position to pick and choose.
I am moving away from apartments in the inner and middle rings of Brisbane due to concerns about potential oversupply. To get me interested in such a deal it has to “make my tail wag so hard I fall off my chair”.
I have some townhouse and unit projects in undersupplied areas coming through the system. While there will be some pain ahead for the Brisbane apartment market, I remain confident that it will be restricted to areas where GPS has no exposure.
It is not a matter of a wide ranging drop in prices. It will be more that there are areas which have been heavily marketed to non-Australian residents at inflated prices, which need to come back to the real market.
The media loves picking out some data and turning it into a bad news story. As can be seen in the article ‘Real Research‘ by James, they need to do what GPS does, namely to get out there and do some real research. What is really happening is a lot more mundane and hardly newsworthy.