Stockland chief executive Mark Steinert says talk of a Sydney housing bubble is misguided, but acknowledged the hot market for both housing and development sites.
Some sites were selling at prices Stockland, Australia’s biggest residential developer, would not pay, he said.
“People are getting into pre-bidding and gazumping — it’s all back on,” Mr Steinert told a Committee for Economic Development lunch in Sydney yesterday.
But the city’s undersupply of housing, which could take at least five years to fill, and the need for infrastructure would create opportunities with Sydney to see a “golden decade”, he said.
In response to Meriton Apartments’ founder Harry Triguboff’s comment this week that the city’s apartment prices were topping out, Mr Steinert noted that some of the site values were “punchy”.
“It is clear that some of that capital is looking to deploy in development at total returns of a level that we wouldn’t entertain,” Mr Steinert said.
“What you would be worried about is if there was enough of it to be systemic (which it isn’t) at this point in the cycle.
There are already sites that have come back to market because they underestimated the planning complexity; so markets typically have a way in sorting through these things,” he said, adding that the extra supply would help make housing more affordable.
Mr Steinert was part of a panel that discussed the NSW property market, along with GPT chief investment officer Carmel Hourigan, UrbanGrowth chief executive David Pitchford and Commonwealth Bank head of real estate Graeme Ross.
On next month’s budget, Ms Hourigan and Mr Steinert both urged that the federal government be cautious, with pragmatic policies that will add to certainty.
“We still think there needs to be some stimulus coming through, so not too much negative news, not too much of a negative impact on household consumption. (The budget) is obviously very critical in terms on what goes on in business sentiment and also consumer sentiment, particularly down the east coast,” Ms Hourigan said.
Ms Hourigan, who is a candidate to replace Michael Cameron as GPT’s chief executive, added that the cancellation of recent infrastructure projects, such as the East West Link, made investing in Australia more risky.
“We need a way that we can push through the political system and the (short) terms of the governments, so we can actually encourage offshore investment,” Ms Hourigan said.
Ms Hourigan said that the prices of Australian commercial property would continue to rise despite slow rental growth, due to the wave of new offshore capital looking to invest in Australia.
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