An assessment of development funding for new housing post GFC in Queensland, Australia
Bryant, Lyndall (2012) An assessment of development funding for new housing post GFC in Queensland, Australia. International Journal of Housing Markets and Analysis, 5(2), pp. 118-133.
Purpose: The purpose of this paper is to identify changes in bank lending criteria due to the GFC and to explore the associated impacts on new housing supply in Queensland, Australia.
Design/methodology/approach: This research involves a survey of each of Australia’s big four banks, as well as two prominent arrangers of development finance. Data on key lending criteria was collected: Pre GFC, during the GFC, and GFC recovery stage.
Findings: The GFC has resulted in a retraction of funds available for residential development. The few institutions lending are filtering out only the best credit risks by way of constrictive loan covenants including: low loan to value ratios, high cash equity requirements, regional “no go” zones, and demonstrated borrower track record. The ability of developers to proceed with new housing developments is being constrained by their inability to obtain sufficient finance.
Research limitations/implications: This research uses survey data, together with an understanding of the project finance process to extrapolate impacts on the residential development industry across Queensland. No regional or sub-market analysis is included. Future research will include subsequent surveys to track any loosening of credit policies over time and sub-market sector analysis.
Practical implications: The inability to obtain project finance is identified as a key constraint to new housing supply. This research will inform policy makers and provide important quantitative evidence of the importance of availability of development finance in the housing supply chain.
Social implications: Queensland is facing a supply shortfall, which if not corrected, may lead to upward pressure on house prices and falling housing affordability.
Originality/value: There is very little academic research on development funding. This research is unique in linking bank lending criteria to new housing supply and demonstrating the impact on the development industry.
Impact and interest:
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|Item Type:||Journal Article|
|Keywords:||Australia, Housing, Project Finance, Banks, Development Finance, Housing Supply, Global Financial Crisis, Lending Criteria, Affordability|
|Subjects:||Australian and New Zealand Standard Research Classification > BUILT ENVIRONMENT AND DESIGN (120000) > OTHER BUILT ENVIRONMENT AND DESIGN (129900) > Built Environment and Design not elsewhere classified (129999)|
Australian and New Zealand Standard Research Classification > COMMERCE MANAGEMENT TOURISM AND SERVICES (150000) > COMMERCIAL SERVICES (150400) > Real Estate and Valuation Services (150403)
|Divisions:||Past > QUT Faculties & Divisions > Faculty of Built Environment and Engineering|
Past > Schools > School of Urban Development
|Copyright Owner:||Copyright 2012 Emerald Group Publishing Limited|
|Copyright Statement:||NOTICE: this is the author’s version of a work that was accepted for publication in [International Journal of Housing Markets and Analysis]. Changes resulting from the publishing process, such as peer review, editing, corrections, structural formatting, and other quality control mechanisms may not be reflected in this document. Changes may have been made to this work since it was submitted for publication. A definitive version was subsequently published in [International Journal of Housing Markets and Analysis], [VOL 5, ISSUE 2, (DATE)] 10.1108/17538271211225887|
|Deposited On:||14 Oct 2011 07:38|
|Last Modified:||25 Aug 2014 17:47|
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