Sensationalist press commentary blamed for suppressed home buyer confidence: AV Jennings
Sensationalist press commentary about the outlook for residential markets was, in part, to blame for suppressed consumer confidence, according the boss of house and land package company AV Jennings.
Its chief executive Peter Summers said confidence in relation to property had been hit in "a constant barrage of media."
"Much of this media reflects extreme examples or views," he said adding that it remains a fact that market fundamentals remain sound and, in some areas, strong.
The house and land developer AV Jennings also blamed political uncertainty, a slowdown in bank lending for its plunge in profits.
It presented shareholders with headlines it said reflected a frenzy.
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Summers noted Australia continued to have a strong economy.
"In analysing where things are at it is important to have this perspective.
"In the past we have had poor market conditions based on high or rising interest rates, we have had poor employment prospects in areas where our customers work.
"Market cycles are part of the property landscape.
"They need to be planned for, they need to be managed.
"But they also need to be understood."
He said "some corrections were required, some are still required and the most obvious remains government policies.
"But the gap that has opened up the most is consumer confidence in residential property."
He suggested too shareholders that in the short term it was unlikely to change significantly.
"However, as the media frenzy moderates, as it always does; as elections come and go and some sense of the political future emerges; as the necessary pricing adjustments occur; we believe those strong fundamentals will see a return to positive market conditions."
The company noted there is no doubt the first half results were impacted by a fast deterioration in market conditions," he noted, adding there had been settlement delays at key projects in NSW and Victoria.
"When we released our full year results for FY2018, we did comment that we expected the market, particularly in Melbourne and Sydney, would most likely slow.
"Both these markets had experienced high growth rates in both volumes and prices, and moderation was not only expected, it was necessary, for longer term sustainability.
"We also flagged the political risk around three planned elections in Victoria, New South Wales and federally.
"Traditionally markets slow in the lead up to elections.
"There were the early signs of the impacts coming out of the Banking and Finance Royal Commission," he said.
"It is fair to say that the extent of all of these was underestimated.
"The impacts from the Royal Commission have been extensive and the political landscape continued to deteriorate, including seeing another change in Prime Minister."
AVJennings announced profit before tax of $2.167 million for the first half 2019 financial year, consistent with revision statements made to the market prior to Christmas
"The company believes that consumer confidence is currently suppressed by a combination of political uncertainty (especially Federal tax policy), sensationalist press commentary about the outlook for residential markets and the relatively sudden tapering of residential property lending appetite of banks."
"Major lenders are digesting the recommendations of the Banking Royal Commission and tighter credit conditions have bitten particularly hard over the past six months,” Summer said adding he was seeing first homebuyers re-enter the market.
"Which is pleasing, but second and subsequent buyers are not currently confident to contract prior to selling their existing home, so the transaction chain is slower across the board.”