The last cycle in Australian property saw the rise of a clique of developers that worked against the interests of ordinary Australians. They were the apartment moguls addicted to, and feasting off, a mass immigration program run completely out of control. Highrise Harry Triguboff is the archetype.
Today another of those fast-rising property magnates delivers the sector some very bad news. Tim Gurner drops a truth bomb at The Australian:
- The collapse in immigration and the flow of Chinese has trashed the market for 300-plus apartment skyscrapers.
- This is a “systemic change”. By which I assume he means “structural”.
- The Gurner solution is novel: “Just get the bloody Virgin and Qantas planes and go and pick up all the (international) students and bring them back.”
- Gurner is very bullish on detached home prices.
- Salta Properties Sam Tarascio chimed to say he has masses of empty apartments with rents down 30-40%.
We all know that the deeply corrupt Morrison Government aims to reboot this trade as soon as possible. Both for students and migrants generally. My view is that they will only succeed very slowly:
- Vaccine rollouts here and in emerging markets are very slow.
- Chinese students are not coming back in numbers. That’s over.
- Even if numbers rise, other nationalities do not buy apartments like the Chinese kiddies.
- Finally, the Morrison Government is odds-on to lose the next election and Labor will not bring in as many short-term migrants.
In short, I agree with Mr Gurner. Things will improve from here but only incrementally and get nowhere near the boom of the last cycle meaning the overhang of stock will takes years to clear:
Immense apartment glut
The apartments horror is here to stay.
