Meriton founder and chief executive Harry Triguboff says it is pretty much business as usual at Meriton, and any buyer confidence shaken by recent tax changes, rising interest rates and negative media coverage has been short-lived.
“In my 60-plus years building and selling apartments, I have been involved in major property crashes, particularly in the early years with the unions and green bans,” Mr Triguboff said.
“This downturn is nothing more than a little bingle that is unlikely to do much damage at all… if any.
“I’m expecting a very quick recovery. It is unfortunate that there is a noticeable downturn in established houses, but we are not seeing it in apartments.
“Units are holding up much better than houses, continuing a pattern seen across property cycles where units tend to outperform in downturns,” he said.
According to Domain, the average duration of an upswing in the market since 2000 is 2.8 years, with average growth of 32.3 per cent. The average duration of a downturn is 0.7 years, with an average decline of 2.9 per cent.
It would seem the “sharp downturn” that financial institutions and research groups are talking about does not apply to units.
“If anything, we are seeing an increase in buyers who are coming from houses who never previously considered living in an apartment,” Mr Triguboff said.
“It is not reassuring for buyers and sellers when the auction clearance rate is so low. Again, it doesn’t tell the whole story.
“You don’t see new apartments being auctioned. If they were, it would definitely raise the auction clearance rate and the downturn wouldn’t appear to be as significant,” he said.
Mr Triguboff went on to say that broad-brush media reports do not help buyer confidence either. He is concerned about what he describes as sensationalism in media coverage, with headlines screaming, “Worst downturn in 30 years.”
“If you were interested in the market five years ago, you would have seen that exact same headline,” Mr Triguboff said.
“Buyers and sellers are still better off today if they bought or sold in that market five years ago. And it will be the same five years from now.
“We might not look like we’re in very good shape right now, but property is a long-term investment and it is still the safest investment.
“My concern is buyers will hold out, only to miss out when they can’t recognise when prices start to rise again.
“That is still not our biggest problem. There are still too few apartments being built, and that is the crisis we should be most concerned about. Demand is still much greater than supply.
“Commencements are down, and even those who have started to build, with costs so high, no one knows if they will finish.
“The Meriton strength is that we can deliver, and we do. We are recognised for getting the job done every time.
“Nothing has changed for us. We have made many Meriton buyers millionaires and we will continue to do that in the future. I am doing something now that I have not done before to help keep the market buoyant. I am negotiating any reasonable offer. It won’t be a big discount but, in a softer market, buyers love to haggle and I enjoy it as much as they do,” he smiled.
“Another huge benefit is we are continuing to offer vendor finance. It’s not only Australia’s lowest fixed interest rate, but it allows buyers to borrow more,” he said.
On more conventional finance, Canstar insights director Sally Tindall says one bank has made a surprise double cut to interest rates, while another 18 lenders have reduced variable rates. In a Canstar wrap-up, AMP slashed fixed rates by 0.50 percentage points, double the average fixed-rate cut of 0.22 percentage points across five lenders.
“Competition among lenders continues to create opportunities for some households to cut their borrowing costs,” Ms Tindall said.
She believes lenders cutting rates sends a clear signal that competition in the mortgage market remains strong. She did, however, warn borrowers not to mistake the cuts as a sign the Reserve Bank of Australia has declared victory over inflation.
“My advice is: don’t be swayed by timing,” Mr Triguboff said.
“You are dealing with a long-term investment and if you really want it, buy it. I’m confident it will pay off in the long run. What is lost today by a small percentage will be gained in spades in a stronger market.
“When the market drops slightly, we hear about it from all angles, but when the market is recovering, we don’t hear a whisper. Buyers might not even notice prices rising again until it is too late… and they miss out again.”
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