Credit update and outlook

As we approach the end of the interest rate rising cycle, we are seeing various indicators stabilise, including building materials, supplies, and stock. This is a positive sign that the market is adjusting, and we are closely monitoring these trends.

We highlight three items we are carefully monitoring:

Labour

Ensuring trades have enough labour onsite across all our active projects and are getting paid

Interest rates and inflation​

Any effect they’re having on project returns, asset values, and purchasers access to finance

Statutory bodies​

Potential delays at project completion with issuance of occupation certificates and title registrations

As always, we are actively managing these risks and maintaining close communication with our Borrowers to mitigate any potential issues.

We are encouraged by recent developments, such as the transition of the property team from the Departments of Fair Trading into the new regulator, Building Commission NSW. We anticipate the change to lead to increased productivity in the planning review process.

Our team remains vigilant and proactive in addressing any issues that arise with projects we are financing, increasing efforts and support to borrowers where necessary, to help ensure successful project completion outcomes.

Despite some economic headwinds, the macro picture remains stable, and we are confident in the resilience of the market. Property prices have remained relatively stable, and there continues to be strong demand for good-quality product.

The housing shortage crisis remains a top priority for state governments with vast changes anticipated to assist in addressing this issue. We are closely reviewing proposed changes to planning controls, transit-oriented development, and affordable & social housing initiatives, to see how they may impact our lending strategies.

Whilst we acknowledge challenges remain, we continue to believe our processes leave us well-positioned to navigate them successfully. We remain committed to our investor-first approach and will continue to prioritise your interests in all our operations.

As always, happy to chat through any concerns you may have.

This article is for information purposes only. It does not take into account your objectives, financial situation or needs. Any opinion expressed in this article are of the author and is subject to change without notice. Readers are reminded to exercise caution and use their own judgment when interpreting and applying the information contained in this article.

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