Construction giant Geocon offers to match deposit
Geocon is making an aggressive pitch to first home buyers, offering to match deposits of up to 5 per cent of the purchase price on apartments in its Metropol and Tryst developments.
The Canberra construction giant says it could comfortably fill its ever-growing number of complexes without chipping in to help first home buyers, but is offering the incentive to help people transition from renting to homeownership.
The offer comes as a Housing Industry Association report released this week reveals Geocon, despite its sole focus on the Canberra region, is now the fourth-largest residential multi-unit builder/developer in Australia.
It started construction on 906 dwellings last year - all in multi-unit developments - with 856 in the ACT and 50 in a hotel across the border in Murrumbateman.
Geocon general manager of development Peter Micalos said Canberra's apartment market was booming.
"It’s not necessary for us to do it," Mr Micalos said of the deposit-matching scheme.
"The apartment market in Canberra at the moment is booming, and when we’re in booming markets we tend to get a lot more competition to buy apartments and a lot more investors that are interested.
"...This initiative is to assist the first home buyer segment of the market during a period where the apartment market is booming and it’s hard to get in."
Consumer Law Centre ACT chief executive Carmel Franklin warned while it was important to help first home buyers into the market, people taking up the offer should be wary of over-stretching themselves.
She cautioned that a deposit was just the start of a long financial commitment.
"If you can't afford a 10 per cent deposit, what is your capacity to pay a mortgage?" Ms Franklin said.
"You'd want people to have a serious look at that.
"If they can only afford a very small deposit and have to rely on Geocon's grant, in effect, to [enter the market], they really need to consider whether they should go ahead."
Asked whether the dollar-for-dollar deposit scheme might entice people who were not in a position to enter the property market, creating a situation where they were later unable to afford repayments, Mr Micalos said he did not believe so.
"What we have to remember is that we are initially asking the first home-buyer to come up with some of the deposit themselves; they have to demonstrate that first," he said.
"Also, what we have to be aware of is that a lot of these people entering the property market are renting at the moment.
"They are paying rent as well as saving up for their deposit, and that can often be quite a challenging proposition for a young person in Canberra today."
Geocon's rise to become the fourth-largest residential multi-unit builder/developer in Australia is remarkable given its focus on the ACT and the fact is has only been in operation for 11 years.
According to the Housing Industry Association report, construction started on 4927 dwellings in the ACT last financial year.
Geocon is responsible for 856 of those - all in multi-unit developments - meaning the company is behind nearly 20 per cent of the territory housing that started construction in 2017/18.
The company also built a further 50 units in a hotel just across the NSW border in Murrumbateman.
Geocon managing director Nick Georgalis has previously said it has a 50 per cent share of Canberra's apartment market.
Mr Georgalis said while some commentators wanted to "throw shade" on the local market, Geocon was forecasting steady growth amid population growth, low unemployment, historically high residential building approvals and historically low residential vacancy rates.
Geocon general manager of construction Damon Smith said the Housing Industry Association report spoke for itself.
"I think that just underpins the Canberra market and the strength of the market," Mr Smith said.
"At the end of the day, if there’s no sales, there’s no starts [on construction]."