No apartment bubble on the horizon, says Westpac chief
Westpac’s chief executive has played down fears of a bubble in the apartment market.
Westpac CEO Brian Hartzer has told the parliamentary inquiry into banking that while unit prices in Sydney and Melbourne are “very high”, he does not believe a housing bubble exists in the cities.
"I would draw the distinction between a speculative bubble in prices and prices beyond what fundamentals would justify," Hartzer said.
Instead, Hartzer argued that the apartment markets in Sydney and Melbourne were “the consequence of severe supply constraints running into a significant step up in demand” from offshore buyers, The Australian reported.
Hartzer said Westpac would continue to fund high-quality apartment projects targeting local buyers, but said apartments targeting overseas buyers who have no intention of living in their purchase were “in trouble”, the Australian reported. He also said China’s policies clamping down on investment saw developments that were pre-sold to overseas buyers run into trouble closing sales.
“That is creating a bit of glut of supply, which may not be what the local buyers want to buy. Generally, those buildings do end up clearing. It’s just taking longer,” he said, according to The Australian.