Stockland boss predicts more gloom before boom
PROPERTY heavyweight Stockland has delivered a downbeat assessment of the housing market.
And the group, Australia’s biggest listed residential developer, has warned it has been hit by high default rates in its estates.
Releasing its full-year results yesterday, Stockland said that although it was well positioned in growth areas in major cities, the market would take “some time” to come back.
Chief executive Mark Steinert said market conditions were “mixed, with steady employment growth, record low interest rates, recent tax cuts and high investment in infrastructure”.
But there was also “broad uncertainty driven by reduced credit availability, weak consumer sentiment and low wages growth”, he said.
Shares in the group fell heavily after the results were published.
“We’re very confident the housing market has bottomed,” Mr Steinert said. “We see that in auction clearance rates and the 50 per cent improvement in inquiries in Sydney and Melbourne. But at the same time it’s very difficult for customers to get their loans approved,” he added, noting the default rate — the proportion of customers who pay a deposit but don’t proceed with a purchase — had hit 7 per cent. During the first half, it was about 3 per cent.
Mr Steinert said buyers had been unable to get finance or had changed their minds. “While loan approvals are gradually improving, the rate at which that improves will be key determinant in sales volumes,” he said.
Conditions were in place for a strong rebound, he said, and he warned there was the prospect of a housing under-supply by this time next year.
“We’re optimistic about the future but have this near-term caution about the pace of recovery,” Mr Steinert said.
The group has cut its target for residential property settlements this financial year to “over 5000”, compared with 5878 settlements the past year, but will keep its residential profit margin at about 19 per cent.