Developers report renewed 'momentum' in new home market, as some offer incentives to quell nerves

With the coronavirus pandemic impacting on sales across the new home market, a Melbourne developer is offering to pay 5 per cent of the price of its off-the-plan apartments on behalf of purchasers.

The scheme is among a raft of incentives developers around the country are offering to quell the nerves of buyers.

Glenvill, the developer behind the YarraBend community in Alphington, launched the 5 per cent contribution towards deposits made on its Papersmith apartments last week. The offer is aimed at purchasers who may be struggling to save a deposit, particularly first-home buyers.

“Our purchasers only need to contribute a small deposit – $5000 for a one-bedroom apartment or $10,000 for a two-bedroom apartment – to qualify for the payment,” said Sam Tucker, Glenvill sales and marketing manager.

Glenvill’s 5 per cent contribution, which is only available in May, will essentially halve the deposit amount for buyers of the 20 Papersmith apartments still on the market. Buyers will either need to pay the balance of the deposit directly or enter into a 12-month savings plan.

“We’ve always wanted to come up with a way to help people purchase their first home. However, with the uncertainty around COVID-19, we found that the biggest objection from potential purchasers was that they weren’t comfortable parting with 10 per cent,” Tucker said.

“Therefore, it made us think differently about how we could help people to commit and yet still have pre-qualifying sales for construction funding.”

Another Melbourne developer, Caydon, is offering some buyers an escape clause in their contract in case they lose their job due to the impacts of the pandemic.

“The biggest concern buyers are sharing with us is regarding job security, so to accommodate those concerns we have introduced a special condition into the contract of sale giving the purchaser peace of mind,” said Steve Williams, Caydon’s international marketing director.

“Caydon has offered some buyers with a redundancy condition in their contract of sale, providing them with peace of mind that they can get out of the contract should they lose their job as a direct result of COVID-19.”

Some developers haven’t felt the need to offer incentives.

Tim Gurner, well known for his luxury apartment developments across Melbourne, Brisbane and Sydney, said sales had continued throughout the pandemic.

“There was an initial slowdown when the virus first hit as people were – rightly so – focused primarily on their families and health, however in the past 10 days we’ve seen some great inquiry momentum, particularly from owner-occupiers,” he said.

“We’ve certainly had many, many discussions with our buyers about what the future holds but we have found the overwhelming majority of our purchasers are keen and eager to move into their new homes. We will probably only see three or four settlements fall over as a result of the coronavirus [crisis].”

Sydney-based Crown Group, which is behind the Mastery development in Waterloo, is not offering any sales or incentives to the market. With $63 million worth of sales in the past three months, Prisca Edwards, Crown’s director of sales, said the company didn’t need to.

“In terms of completed apartments, we are still getting a lot of inquiry and off-the-plan is slowly starting to pick up again, perhaps because the mood has lifted as people settle into the situation. It’s their new normal so they have started thinking about the long-term again.”

With open for inspection and auction restrictions easing in some states, agents are hopeful buyers will regain confidence.

Colliers Brisbane director Andrew Scriven said inquiries were lifting and he hoped sales soon would too.

“We have seen a consistent four-week improvement in our inquiries, so they’re back at levels that they were in the beginning of March,” he said.

“I’m not going to tell you that sales are the same, they are probably lagging by 50 to 60 per cent to tell the truth, but there’s an air of positivity now that movement is being encouraged.”