Banks Ease Away From Apartment Lending
The move away from apartment development has left a gap for non-bank lenders.
The move away from apartment development has left a gap for non-bank lenders.
Banks have been warier of lending to apartment developers over the past financial year, allowing the ever-expanding pool of non-bank lenders to enter the market.
According to analyses from property and construction consultancy Plan1, the banking sector’s exposure to apartment developers fell 7% to $32 billion in 2017, when apartment construction was booming. It was 18% lower than the peak $39 billion exposure of 22008.
As of June 30 of the 119,000 apartments under construction, worth about $46 billion once completed, the banks have exposure to approx. 70%.
The big four banks are, perhaps to be expected, wearing the brunt of the exposure with 76% of the funding coming from ANZ, CBA, NAB and Westpac. According to Plan1 co-founder and director Richard Jenkins, this figure represents the bank’s lowest share of the market since mid-2018.
While banks slow their approach to apartment development lending and increase their barriers to funding through pre-sales and large deposits, smaller, non-bank lenders are filling the void.
MaxCap, one of the nation’s leading non-bank commercial real estate lenders has been one of the more active entities in recent years.
In a recent interview with the Australian Financial Review, MaxCap NSW director David Oudshoorn outlined his confidence in the Sydney market over the next few years.
Mr Oudshoorn isn’t the only one bullish about the market with Qualitas, Wingate and Pallas Capital all providing funds to developers.
The nation’s biggest lender – the Commonwealth bank – revealed in its half-year results in February that only 35 of its 77.5 billion exposure to commercial real estate debt was to developers.
Early indications from several big regional real-estate boards suggest March was overall another down month.
Art can transform more than just walls—it shapes mood, evokes memory, and elevates the everyday. Discover how thoughtfully curated interiors can become living expressions of personal meaning and refined luxury, from sculptural furniture to bespoke murals.
Early indications from several big regional real-estate boards suggest March was overall another down month.
OTTAWA–The nascent recovery in Canada’s housing market has become a casualty of the trade dispute with the U.S.
The latest national home-resale data are due out Tuesday, but early indications from several big regional real-estate boards suggest March was overall another down month as many prospective buyers exercised caution.
The recent weakness in home sales has dimmed the previously brighter outlook for the property market coming into 2025, when buyers were encouraged by the Bank of Canada’s aggressive interest-rate cuts.
“The chills the U.S. trade war has sent through participants in the housing market are getting frostier,” said Robert Hogue , assistant chief economist at Royal Bank of Canada.
Hogue said resales are down materially in a number of markets two months running, and home prices in several markets are coming under pressure as inventories rise. And although Canada was spared additional levies when President Trump unveiled so-called reciprocal tariffs on dozens of countries earlier this month, no meaningful rebound is likely so long as trade uncertainty lingers, he said.
Home buyers in Toronto, Canada’s most populous city and the country’s financial hub, aren’t turning up for the usual spring pickup in property-market activity.
Sales in the Greater Toronto Area slumped 23.1% in March from a year earlier, as new listings for the region jumped close to 29%, according to the Toronto Regional Real Estate Board. That marked the worst month of resales since 1998.
The board’s chief information officer, Jason Mercer , said many potential home buyers were likely taking a wait-and-see approach given the economic worries as well as a pending federal election. “Homebuyers need to feel their employment situation is solid before committing to monthly mortgage payments over the long term,” he said, adding that ownership has become more affordable and prices in the area fell about 3.8% year on year in March.
Uncertainty is also weighing on the housing market in Calgary, the biggest city in oil-rich Alberta. The city’s real-estate board said realtors reported a 19% drop in sales of existing homes from last year, with a similar trend of improving supply and a sharp increase in the average number of days that homes were on the market.
On the West Coast, home sales registered in the metro Vancouver area of British Columbia were the lowest for March since 2019, falling 13.4% on a year earlier and coming in close to 37% below the 10-year seasonal average, while active listings continued to rise.
There are some areas of resilience. The Quebec Professional Association of Real Estate Brokers said total sales in the province were up 9% year on year in March. Still, RBC’s Hogue estimated Montreal sales in March were down about 15% from December seasonally adjusted, effectively rolling back the advance since the end of last summer.
The most recent national data for the country, from the Canadian Real Estate Association, showed resales dropped 9.8% month over month in February, when homebuyers may also have been put off by harsh winter storms in parts of the country. That marked the sharpest fall since May 2022 and brought the level of sales to their lowest level since November 2023, snapping signs that activity had been picking up in recent months.
Rishi Sondhi , an economist at Toronto-Dominion Bank, in a recent report estimated the country was tracking toward a double-digit quarterly decline in Canadian home sales and a mid-single-digit drop in Canadian average home prices for the first three months of 2025. That is much weaker than a pre-Trump inauguration forecast made in December that projected a loosening in federal mortgage rules, lower interest rates and continued economic growth would fuel a modest gain in sales and prices.
Central-bank officials are set to decide Wednesday on monetary policy, but they have signaled a cautious approach to rates as they balance the prospect of tariffs stoking price pressures against the likelihood that they will dampen demand and weigh on the economy. That could mean the Bank of Canada will pause after seven straight cuts to its policy rate.
Housing is a hot topic for party leaders campaigning ahead of the April 28 election, with both the incumbent Liberal Party and opposition Conservatives proposing tax cuts and incentives to encourage buyers and builders.
The outlook for new homes has also dimmed with the tariff threat. The value of residential-building permits issued in February fell 2.9% from a month prior, adding to a retreat in January that took back some of the surge in intentions in the final month of last year, Statistics Canada data last week showed.
Screenwriter and TV producer Jeff Franklin built the lavish residence on the homesite where the 1969 Manson Family murders took place.
Early indications from several big regional real-estate boards suggest March was overall another down month.