With the introduction of further lending hurdles for property developments by the CBA, one could be forgiven for having flashbacks to the tougher post GFC years. Though interests rates remain modest, its seems the pre-sale hurdles are marching upwards while the LVR's are marching down. The new rules are said to be required to keep APRA happy, but I would expect they are largely about managing CBA's exposure to property in the next phase of the cycle.
Thankfully there are still many funding options available at present with property syndicates and non bank financiers offering very competitive alternatives.
HOT on the heels of tightening lending to brownfield and apartment developers, the Commonwealth Bank has also introduced restrictions on greenfield developments. The CBA has tightened its criteria for new greenfield developments and will only finance projects once preliminary works such as roads have been compled and the project is ready for development. The CBA is the first bank to make the move, prompting fears in the industry that the other banks may follow its example. Last week the CBA lowered its finance for brownfield and multi-residential developments from 80% to 75%. Furthermore the CBA has informed developers that it will only fund apartment projects that are 100% pre-sold, up from the previous level of 80%. The new lending policy is part of CBA's move to comply with Australian Prudential Regulation Authority's new rules.