An assessment of development funding for new housing post GFC in Queensland, Australia
International Journal of Housing Markets and Analysis
ISSN: 1753-8270
Article publication date: 1 June 2012
Abstract
Purpose
The purpose of this paper is to identify changes in bank lending criteria due to the global financial crisis (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 were 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.
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.
Keywords
Citation
Bryant, L. (2012), "An assessment of development funding for new housing post GFC in Queensland, Australia", International Journal of Housing Markets and Analysis, Vol. 5 No. 2, pp. 118-133. https://doi.org/10.1108/17538271211225887
Publisher
:Emerald Group Publishing Limited
Copyright © 2012, Emerald Group Publishing Limited