If you think property prices won't keep rising...

I have a very lucrative house and land deal, only a small amount of $'s. so i ring a big 4 bank thru which i have previously done some dev funding.

I ask if they are still lending. he says yes. oh good i say. he says we need 100% presales plus equity in the project. ok... I say this is only a 1 off house and land deal that will have a final LVR of around 39% and yields 20% on cost. he says that's nice but you would need to presell it. I say ok, that wouldn't be hard. Then he says, well actually, there's more to it than that, you wouild also need to provide us with a full picture of all of your entities and your incomes etc.

so... now you need 100% presales, equity (30-40%??), serviceability. Can you imagine trying to do a 40 apartment development and demonstrating serviceability?

then he admits that he hasn't done a deal in 12 months and when I asked him if he was bored he said yes.

so I don't know how anythign will get built in this country. Still, Gail Kelly reckons it's business as usual so no need to worry.

thankfully I have found a couple of banks that are still interested in being banks rather than insurance salesmen
 
It depends on the POV, though some of us been posting bout this credit drought already.
As someone who's never had a lo-doc and always had to fight the "cash poor equity rich" battle, getting a 60% lo-doc was the easiest finance I ever got.
As for Gail, I always thought SG was the worst of all banks under her guidance.
 
we aren't even bothering to try and borrow for another 12 months. we hit servicibility wall on our last purchase, and credit has only gotten tighter.

no one is building in bulk. the onflow for years to come will be interesting.
 
banks are looking for risk free returns, from property investers , and any thing over the mill, gets sloged with mortgage insurance and comercial rates , so if you want to do big stuff you just can't move forward , but sticking to the smaller stuff will allow you to slowly gain good traction, for the future, annoying ! yes very!:mad:
 
I was looking to build a dual occupancy property in 2010, ..... It looks like it might be more difficult than I first thought to get finance if the above comments are any indication, ..... maybe if we leave it to the end of 2010 the banks may be more relaxed about it ..... :rolleyes:

It's going to get very interesting over the next 12 months watching the battle between the banks who want 100% certainty in deals. The developers who just want access to funds so that they can build. The Fed Govt who needs homes built to address the current situation of population growth and immigration. At some point something will have to give.

I was reading an article in the paper about the NRAS scheme The reporter was saying that the scheme is good, but without developer access to funding to build the properties then it basically make the scheme redundant.

Martin
 
It's going to get very interesting over the next 12 months watching the battle between the banks who want 100% certainty in deals. The developers who just want access to funds so that they can build. The Fed Govt who needs homes built to address the current situation of population growth and immigration. At some point something will have to give. ... The reporter was saying that the scheme is good, but without developer access to funding to build the properties then it basically make the scheme redundant.
Yes, it will be very interesting to see how this particular impasse gets resolved.
 
i was looking for an article on the developer, keith johnson, but can't find it online.

there was a big write up in the newcastle hearld this weekend from him coming clean about the financial situation he recently went thru and exactly what happened and when.

he is currently holding sites with over 6000 block potential plus a marina tourist development site.

his problems were two fold - council iffing and ahhing for years and unable to make a decision, listening to every joe blog with a beef while the housing shortage grows more and more critical. all this for the privilege of paying fees of $70,000 per block in government charges.

then the banks have started calling in loans that were being serviced (wasn't behind in repayments), or won't lend to develop the approved and presold sites. he's a fortunately one whose managed to raise the capital required from a private source and stay afloat long enough to move forward - but i'd hate to think how many sunk, and what interest rate he is paying.

so - it's a double pronged blade - between the levels of government and the banks, there is no hope for any major development (or even many minor ones) for a long time.

and then ... last night the real estate institude (yes, i know they have an agenda) were predicting rents to go up around 20% in sydney over the next 2-3 years due to cronic lack of supply.

glad i'm already holding ...
 
I was reading an article in the paper about the NRAS scheme The reporter was saying that the scheme is good, but without developer access to funding to build the properties then it basically make the scheme redundant.
Martin

I think it's time for the government to step in and either force the banks to provide lending or they'll have to provide the funding to developers themselves.

If they need to start a new government bank so be it but they can't just sit back and watch the 4 big banks enjoy record profits and not do the job they were licenced to do.
 
totally agree BV. I was thinking about this more... the banks are banking large profits i.e. reward for risk, when they aren't taking a risk. this is a transfer of wealth from all australians to the coffers of banks and fatcat execs. What banks are offering now could easily be offered by a govt building society. Is it time for these again?
 
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If the federal govt comes out with a govt building society to provide funding to the developers, all it will take is for one state govt to relax their planning laws, red tape and costs a little bit....

... and then WHOOSHKA!!! You watch how crazy the building industry [and greater economy] would go in that state.
It will be like christmas times a thousand! (yeah ok im exaggerating a little)

Could we see sydney taking the lead of a massive property boom on the back of a new Liberal NSW govt relaxing planning restrictions and costs?
Certainly is an interesting thought.
 
trouble is guys - govt has zero understainding of the wealth building potential of private enterprise.

a finance minister has no idea how to start a bank.
 
been done numerous times before... ala R&I Bank come Bankwest come BoS come CBA.

the govt could do this all day long, setting up and flogging off building societies.
 
I was looking to build a dual occupancy property in 2010, ..... It looks like it might be more difficult than I first thought to get finance if the above comments are any indication, ..... maybe if we leave it to the end of 2010 the banks may be more relaxed about it ..... :rolleyes:

It's going to get very interesting over the next 12 months watching the battle between the banks who want 100% certainty in deals. The developers who just want access to funds so that they can build. The Fed Govt who needs homes built to address the current situation of population growth and immigration. At some point something will have to give.

I was reading an article in the paper about the NRAS scheme The reporter was saying that the scheme is good, but without developer access to funding to build the properties then it basically make the scheme redundant.

Martin

So well said, Martin.

You need to add:

The bureaucracy of local Councils.

Regards JO
 
If the federal govt comes out with a govt building society to provide funding to the developers, all it will take is for one state govt to relax their planning laws, red tape and costs a little bit....

... and then WHOOSHKA!!! You watch how crazy the building industry [and greater economy] would go in that state.
It will be like christmas times a thousand! (yeah ok im exaggerating a little)

Could we see sydney taking the lead of a massive property boom on the back of a new Liberal NSW govt relaxing planning restrictions and costs?
Certainly is an interesting thought.

And wouldn't that be nice Witzl.

Who's your pick for leader?

I think as many people hate Tony Abbott, as like him. I don't mind Joe Hockey but haven't seen enough of his Political prowess. I'll give that to Malcolm Turnball. He stands his ground.

Regards JO
 
Completely off topic..... but I think Tony Abbot is rather sexy and there is a photo of him in togs in today's paper. He has a great body for someone in his 40s.

Back to topic now......
 
probably our banks learned a lesson from US, e.g what can happen when there is property oversupply and people with 50k salaries buys 1mil properties.
 
probably our banks learned a lesson from US, e.g what can happen when there is property oversupply and people with 50k salaries buys 1mil properties.

but even in the "good ol' days" we couldn't do that.

wylie - maybe he'll pull the female vote. that'd be great. :D
 
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