“If you’re new to bank, don’t have 120% debt cover and don’t have practical development experience then you’re no chance.”
Banks have clamped down on lending to residential property developers amid concerns about the surge in construction of high-rise apartments, many of which are being sold to foreign buyers.
With the number of apartment towers being developed in Sydney and Melbourne at record highs, banks, developers and property finance experts have confirmed bankers are taking a harder line on lending for large unit developments.
The crackdown has been targeted at developments with a particularly high concentration of apartments likely to be sold to foreign buyers, Development Finance Experts founder Baxter Gamble said.
“In the past, of 100 units a developer would be able to sell 20 offshore. Now the banks are turning around and saying they won’t fund those people,” Mr Gamble said.
Chief executive of business banking at Westpac, David Lindberg, said the tighter conditions were the result of banks and regulators trying to deliberately slow growth in the market over the last 12 to 18 months, after a boom period. Demand for loans from developers had also faded, he said.
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