Harry Triguboff. Photo: Scott Barbour/Getty Images

Billionaire property developer Harry Triguboff says the downturn in Australia’s apartment market will have a “big impact on the economy”, and has called for government intervention to help stem price falls.

Triguboff, owner of the Meriton apartment empire with 8000 units in Australia’s major cities, says prices are down 10% over the past six months and sales have dropped, according to a report in The Australian.

“The big question is whether the government will allow prices and volumes to go down before they start helping,” Triguboff said, adding, “Australians could lose an enormous amount of wealth.”

The rapid rates of national house price growth, led by surges in property prices in Sydney and Melbourne, have been cooling thanks to an increase in supply as well as a range of policy measures, including intervention by the banking regulator APRA to limit investor lending growth and new regulations on foreign investment, combined with increasing evidence that Beijing is clamping down on capital flight from China.

While the interventions were designed to take heat out of the market where prices were rising at rates in the high double digits, Triguboff appears to be suggesting it’s now time to unwind some of the restrictions.

There have been signs that the apartment glut is beginning to bite with more than 30 construction companies going bust in Queensland this year.

The shift in the market has been prompting new questions about how hard the landing might be after the record levels of price growth and construction activity over recent years.

Reserve Bank of Australia governor Philip Lowe last week revealed that the board of the central bank had a detailed discussion of Queensland’s property sector at its monthly rates meeting for September. Speaking in Brisbane last week, he said (emphasis added):

At our meeting today we had the usual review of the global and Australian economic and financial data, as well as a thorough discussion of recent developments in Queensland. We know that the Queensland economy has gone through a difficult period following the wind-down of the mining investment boom, and that the pain has been concentrated in some regional communities. We are also watching the Brisbane property market carefully, particularly the effect on prices of the large increase in the supply of new apartments. More broadly, a range of indicators, including employment and retail trade, suggest that there has been a recent improvement in economic conditions in Queensland. The lower exchange rate is helping, particularly in the tourism, education and rural industries. An appreciating exchange rate would not be helpful from this perspective.

Auction sales indications from around the country were mixed over the weekend. Data from Corelogic showed a preliminary clearance rate of 72.3% in Sydney and 73.2% in Melbourne. However in Brisbane the clearance rate was this week was 43.9%, down from 45.6% last week, and in the Gold Coast the clearance rate was 29.4%, although there were only 34 auctions reporting.

You can read more on Triguboff’s comments at The Australian >>

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