Shift in Structure of Developer Financing to Bubble Model Leaves Hole When Banks Get Conservative

This is rather interesting. Without a bubble to drive presales, developers are dead in the water. This structure accelerates the cycles by cutting off new development until there is enough shortage to drive credit excesses and start the cycle again.

$1 billion in distressed property on the market

I've heard one agent claim that there aren't developers in the old sense of the word anymore, just facilitators between banks and buyers.

Developers don't build a project and sell it - projects can only be financed to be built if they are pre-sold. And you can't pre-sell a project for site you want to buy from a receiver.

The banks' wariness of lending to developers while still recording writedowns in the sector is leaving those parts of the economy dependent on construction weak, with the Gold Coast the clearest example.

The Reserve Bank's latest statement on monetary policy not surprisingly reported credit remains tight for developers. Except for those fortunate enough to be cashed up, developers can't borrow and therefore they can't buy, leaving the banks to hold written-down property portfolios that aren't producing income.