Housing markets in Sydney and Melbourne remain “fundamentally” undersupplied and little impact has seen on the new policies targeting at foreign buyers, says developer Mirvac.
Mirvac has witnessed continued growth driven by the “high quality pipeline”. Ms Lloyd-Hurwitz, Group Chief Executive at Mirvac says, “we also expect to benefit from the substantial investment in infrartsucture the NSW and Victorian governments are making, with a number of our residential projects located near proposed major transport lines.”
The company’s return on invested capital (ROIC) in the residential building division was marked at 18 per cent, higher than the 2017’s target of 15 per cent. This is because of a small percentage of “FIRB” international buyers have withdrawn from sales. Meanwhile, these buyers have contributed 24 per cent of Mirvac pre-sales pipeline bringing $2.7bn revenue to the company. The number has decreased by 2 per cent compared with last year.
In Sydney, Mirvac will keep its focus on apartments, especially those near the train station. A partnership was signed between Mirvac and the Australian Turd Club to build surplus land next to Canterbury Racecourse. In Melbourne, company shifted its focus on masterplanned communities providing 162 homes at Tullamarine.
“Residential construction tends to be very sensitive to interest rates. So falling interest rates from late 2011, combined with strong population growth, increased foreign demand and pent up demand from underbuilding in previous years meant that a boom was inevitable,” research from the Reserve Bank says. The falling number of residential building approvals from last year’s peak may lead to a decline of construction activity, the Bank also warned.
BIS Oxford Economics has expected a drop of 31 per cent in the level of dwellings from 230,000, to 160,000 in coming three years.