Developers in outer urban areas remain positive despite drop in new home sales

Developers in outer urban areas are bracing for a reduction in sales as the full impact of the coronavirus pandemic hits home, but say low interest rates and long settlement periods are enticing some buyers.

Cameron Leggatt, executive manager of residential projects at Frasers Property Australia, says while sales have dropped in the past two months, buyers are still active.

In the past fortnight, five townhouses worth a combined $3 million were sold at Frasers Property’s Minnippi Quarter, 10 kilometres from Brisbane, while six apartments worth $4 million were sold at Ed Square, 40 kilometres from Sydney.

“There’s no doubt as a business we’re now planning for lower sales volumes and looking at all our project strategies,” said Leggatt.

“In some cases it won’t affect programs, where we’ve got good enough sales coverage and we’re feeling confident in that sub-market, but in other projects it might take longer to achieve sales targets and that will potentially push out some programs.”

Housing Industry Association data shows new home sales across Australia have dropped by 22.8 per cent since the introduction of COVID-19 restrictions at the end of March, with project cancellations exceeding 30 per cent, more than four times the typical rate.

But developers at existing projects remain positive.

Stockland’s Stephanie Mackenzie said 14 lots quickly sold out at The Gables development 50 kilometres north-east of Sydney last weekend and sales queries were rising.

“It’s too early to tell the full impact of the COVID-19 pandemic and we expect conditions to be weaker for some time, but we are now seeing the home buyer journey starting to normalise in many parts of the country, which has seen an increase in customer interest,” she said.

“We continue to sell almost 80 per cent of our homes and lots to owner-occupiers, with first-home buyers representing around half our sales.”

Sales were also continuing at Tribeca’s house and land communities with two sales at Tallowong in Rouse Hill in the past month worth $1.7 million and two sales at Dreambuy in Gregory Hills in the same period at a combined $1.5 million.

Tribeca NSW sales manager Vanessa Chymiak said customers were seizing on low interest rates and long settlement periods.

“One of my clients has been put on reduced hours and her partner works as a nurse and the land they’ve purchased is not registering for the next 12 months, so they want to get into the market now before prices rise again,” she said.

In Queensland, buyers put down $5.7 million in deposits at Mirvac’s south-east communities at Everleigh in Greenbank and Gainsborough Greens in Pimpama.

Having spent a lot of time indoors, Mirvac’s Stuart Penklis said buyers were keen to reassess what they want from their homes.

“We’re hearing people are valuing flexible spaces to accommodate their new, mixed-needs as they redefine how they use their homes and the rooms within them,” he said.

In outer Melbourne, apartment and townhouse projects in Ringwood, Maribyrnong and Sunshine were defying expectations of a downturn. In the past week, Leonard Teplin of Marshall White Projects said sales had topped $2.3 million and inquiries were strong.

“There’s been a lot of young families and a lot of people have been looking at the lack of availability and the difference between renting and owning,” he said.

“In most cases you’re financially better off with low interest rates [owning], so if buyers can secure something now and put together a progress payment or a saving plan, in 12 months’ time the smart money is on getting into the market today.”