The deteriorating residential property market will pressure developers as funding costs rise and prices fall, creating extra risks for investors.
The residential market slowdown that pulled prices down 1.6 per cent in July, their steepest annual fall in six years, marks a turning in a housing construction cycle that has boomed for six years and attracted many new players.
In the cyclical and cash flow-dependent construction industry, developers who take the greatest risk on a residential project and stand to make the greatest gain, with margins in the order of 20 per cent are one small category alongside the myriad trades people and subcontractors who often bear the brunt of rising costs and late payments.
But many are li…
Read the full article at: https://www.afr.com/real-estate/turning-residential-market-puts-pressure-on-developers–and-investors-20180801-h13fyc