Growth in private lenders and the launch of White & Partners Debt Management
Latest housing figures released by the ABS show national dwelling approvals rising by 11.3% over the previous month. The majority growth was spurred on by approvals in Vic and NSW which have both enjoyed over 8 months of consecutive growth. Concurrently construction volumes in NSW and Vic have also grown with the remaining states either falling or being steady. This combination and a busy three years in residential development has resulted in senior debt lenders reaching their lending caps. Together with increasing concern over settlement risk and fears over pricing levels and resultant market uncertainty is causing banks to shy away from funding further residential development projects.
The Reserve Bank in April warned banks over the potential for “large losses” from soured loans to property developers. Over recent months the big banks have indicated they now require the following terms to be fulfilled prior to considering funding a new development:
As a result of these tightening criteria, developers are approaching private debt providers. On the back of the this gap in senior debt funding, White & Partners have established White & Partners Debt Management (WPDM). It is the view of WPDM that projects with strong underlying attributes can fall victim to policies that are ‘blanketed’ across the entire market. Already WPDM has seen and bid on a large number of such opportunities over the past month or so.