MALAYSIAN firms with real-estate development projects in Australia must embrace themselves from the likelihood that property prices there may come down this year.
Reuters reported that home prices across Australia’s major cities fell last month as the once red hot Sydney market continued to cool in the face of tighter rules on investment lending, a relief to regulators but a potential drag on consumer spending power.
Property consultant CoreLogic said its index of home prices for the combined capital cities dipped 0.4 per cent last month, from November. Annual growth in prices slowed to 4.3 per cent, from 5.2 per cent in November and 10.5 per cent in the middle of last year.
Prices in Sydney slipped 0.9 per cent last month and pulled annual growth down to just 3.1 per cent, a far cry from the peak of 17per cent seen early last year. Sydney dwelling values were still up 71 per cent on the cyclical low hit in February 2012.
Melbourne — the world’s most liveable city—did better, thanks in part to rapid population growth, with prices easing 0.2 per cent last month to be 8.9 per cent higher for the year.
According to the Reuters report, home prices outside the major cities edged up 0.2 per cent last month to be 3.8 per cent higher on the year.
The report also stated that a slowdown has been much desired by the country’s banking watchdog which tightened standards on investment and interest-only loans, leading banks to raise rates on some mortgage products.
MALAYSIAN FIRMS EDGING UP
Australia has record housing debt and surging prices in two of its key cities, Melbourne and Sydney and the former is where almost a dozen of Malaysian developers have invested their money in.
They have bought either bare land or former building sites and are developing luxury residential apartments that is changing the skyline in the central business district (CBD).
The three biggest firms in Melbourne are SP Setia Bhd, UEM Sunrise Bhd and OSK Property Holdings Bhd, which have a combined A$5.5 billion (RM17.25 billion) worth of projects.
Despite concerns about a looming oversupply and high property prices, these developers have expressed their confidence in Melbourne’s residential market.
SP Setia, which acquired the high-profile site at 308 Exhibition Street from Telstra for A$101 million in May 2016, launched the development last year.
The project, 308 Exhibition Street, is a mixed-use high-rise development and the fourth by SP Setia in Melbourne.
UEM Sunrise late last year launched its third residential luxury development called Mayfair in St Kilda Road. Mayfair will feature 158 residences ranging from one to five bedrooms, with prices starting from A$823,000.
The first two projects by UEM Sunrise are Aurora Melbourne Central and Conservatory.
UEM Sunrise announced late last year that the strong demand from the company’s property offerings in Melbourne had boosted earnings in the third quarter ended September 30 2017.
“We expect new launches byMalaysian developers this year in Melbourne despite the cooling measures that were implemented in 2017. From what we know, there is still strong demand for luxury apartments, especially in the CBD area. Just like Asians, the locals in Melbourne are buying for long-term investment gains,” said an economist.