I saw a lot of discussion over the weekend about Bathla Group entering voluntary administration in Sydney and what it could mean for Australia’s housing and private credit sectors.
There are still a lot of unknowns about what happens from here, so I’m not interested in speculating about Bathla itself.
But I do think it should make developers stop and think about the environment we’re operating in.
Bathla described a combination of softer sales, rising construction costs, changing policy settings and falling buyer confidence as contributing to its position.
None of those pressures will be unfamiliar to developers.
What makes the current environment difficult is what happens when several of them hit at once.
There’s less room to absorb mistakes today
Development has always carried risk. What’s changed is how quickly the conditions around a project can move, and how little margin there is to absorb it when they do.
We’ve had a strong market in WA, but there are signs that some of that momentum is starting to ease. Buyers are becoming more considered. Stock is taking longer to move in parts of the market. At the same time, construction, finance and holding costs remain high.
That creates a very different equation for developers.
A feasibility that worked when a site was acquired can look very different six or twelve months later. Pricing that made sense at the start of a project may be harder for buyers to support. A product mix built around one buyer group may need to appeal to another by the time it launches.
And it’s rarely one big decision that changes the outcome.
A few extra months in market. Presales taking longer than expected. Pricing sitting slightly ahead of where buyers see value. A product mix that doesn’t move at the expected pace.
Each one might be manageable on its own. When several happen at the same time, the margin can disappear quickly.
That’s why I think the early signs of a market shift matter. You don’t want to wait for the data to confirm the market has changed before you start responding to it.
Time has become one of the biggest costs
This is one of the things I think developers need to pay much more attention to.
Every additional month has a cost.
The buyers you designed for two years ago may not be the buyers driving enquiry today. Their borrowing capacity may have changed. Competing developments may have launched. Sentiment may have shifted.
That’s why sales velocity isn’t just a sales metric. It’s a development metric.
The faster you can establish genuine demand and move stock at the right price, the less time the project spends exposed to variables you can’t control.
The market needs to be in the room earlier
For me, one of the biggest lessons from the current environment is that developers can’t afford to wait until launch to find out what buyers think.
Traditionally, sales and marketing comes in towards the end of the planning. Once designs, product mix, pricing and strategy are all determined.
Then the question becomes, ‘How are we going to sell it?’
I think that question needs to be asked much earlier.
We’re talking to buyers every day. We can see which price points are getting resistance, which apartment types are moving, where finance is becoming an issue and when the buyer profile starts to change.
That information should be feeding into product, pricing and feasibility while there’s still time to do something with it.
Bathla is an extreme example. The lesson isn’t.
I don’t think developers in WA should look at what’s happening in Sydney and assume the same thing is going to happen here.
But I do think it’s a reminder of how quickly pressures can compound when margins are tight. You can’t control construction costs, interest rates, government policy or buyer sentiment.
You can control how quickly you respond to them.
In this market, waiting to find out you got something wrong can be one of the most expensive decisions you make.
Jones Realty & Projects work with WA developers from site decision through to sell out, bringing development strategy, product, pricing, marketing and sales into one connected process.
