Melbourne faces a severe housing supply issue, with demand for new apartments outpacing supply.
Despite the Victorian government’s aim to deliver 80,000 new homes annually, current construction levels are far from meeting this target.
“The ongoing supply of apartments has stalled due to feasibility challenges,” said Jason MacKenzie (pictured above), NAB’s head of property development finance.
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Developers are hesitant to launch new projects due to rising construction costs, land prices, and market uncertainties.
“Developers today are finding it increasingly difficult to sell apartments off-the-plan... many simply aren’t prepared to ‘roll the dice,’” MacKenzie said.
The off-the-plan market has faced significant setbacks, including changes to stamp duty concessions and COVID-19 disruptions.
MacKenzie suggested that targeted government interventions could help revitalise the apartment development industry.
Potential measures include reinstating off-the-plan stamp duty concessions, prioritising skilled migration in the building industry, and streamlining planning processes.
“There’s no easy solution... this will always need a multi-pronged approach,” MacKenzie said.
Ample liquidity in the market, coupled with innovative finance solutions from banks, could support developers in overcoming feasibility challenges.
“Banks are continuing to review lending criteria, aiming to support clients with innovative finance solutions,” MacKenzie said.
However, further government support may be necessary to stimulate developer appetite.
As Melbourne grapples with a housing shortage, the focus is on finding ways to increase apartment supply.
MacKenzie stressed the need for collaboration between developers, financiers, and the government to address the challenges.
“At NAB, we’re here to support our clients... working together to help solve this difficult issue,” the NAB leader said.
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