Many in the residential sector are approaching 2016 with trepidation. Market commentators are forecasting a contracting market and there is an expectation that prices will also stabilise and drop. While this is great news for housing affordability in our State, many developers and landowners are wondering how they will continue to deliver quality product at lower rates and where the new opportunities will be. 

Despite the predicted downturn in the market, we continue to see plenty of opportunity for savvy developers. Already more prominent sites are becoming available as over‐committed developers seek to offload holdings. We can also expect to see a surge of buying at particular price levels from investors and first home‐buyers who need prices to normalize to get a foothold in the home ownership market. 

Developers do need to exercise greater caution when securing sites in this changing market, but the fundamentals still apply. Well‐located sites in key growth areas will always be a safe bet and provide “value uplift”.  

In metropolitan Sydney infrastructure is key and any areas where significant funding is being applied to improve public transport, road networks, health facilities and retail centres is earmarked for growth. Sydney's south‐west corridor remains a hotspot, with substantial improvements to infrastructure including extensions to the rail network at Oran Park, a new train station at Leppington, the proposed airport at Badgerys Creek and the continued expansion of the M5 Motorway and other key roads. 

Another key indicator of growth is employment, with strong employment directly linked to high consumer confidence and a stable property market. The investment in infrastructure in south western Sydney is tipped to continue and will also significantly increase employment security. 

We predict the wholesale building model will become a more favourable option for developers and landowners. It offers a way to release the pressure of the changed residential market and to continue to deliver affordable product and maintain high quality while still maintaining profit margins. 

The wholesale building model provides significant savings in the build rate for developers and is a way profitability can be maintained, even when prices are being reduced, helping to maximise revenue from medium and large‐sized projects. 

Eliminating weighty overhead costs such as display homes, sales teams and big marketing campaigns means that these savings are passed directly on to developers using the wholesale building model. 

2016 is set to be a year that puts the residential development sector through its paces yet will bring in welcome changes to the market, including greater opportunity and improved affordability in some areas of the market. Savvy developers are already acting on new opportunity that the forecast changes are creating while others look to do things a little differently, such as using the wholesale building model, to maintain profitability. 

ENDS 

Media enquiries to: 

Karen Gampenov or Yolanda Forsyth 

The PR Partnership 

Ph: (02) 8880 9377, 0411 795 131 (KG) OR (02) 8880 9375, 0475 372 240 karen@prpartnership.com.au OR yolanda@prpartnership.com.au