Stockland sees residential risk to the downsize

Stockland sees residential risk to the downsize
Stockland sees residential risk to the downsize

Stockland, the nation’s largest listed housing developer, says residential sales remain weak, with “risk to the downside”.

It was especially the case in Stockland estates on the outskirts of major cities and regional areas.

Cancellation rates have increased moderately on the back of uncertainty created by current market conditions, it advised yesterday.

Stockland chief executive Mark Steinert told investors that buyer defaults had increased in the last quarter of the 2018-19 financial year to 5 percent, above the long-term average of 3 per cent.

Stockland has more than 2800 contracts on hand for settlement from the 2020 fiscal year, but the group expects challenging conditions to continue this year.

Even after the post-Federal election uplift with enquiry levels recovering in Sydney and Melbourne, where the downturn had been the deepest, it noted.

Perth and South East Queensland remained flat.

Stockland chief executive Mark Steinert said their residential sales for the March quarter were 26 percent below the December quarter.

He blamed “challenging market conditions, reduced credit availability and buyer uncertainty due to the upcoming federal election”.

Stockland sold a major partially completed estate, The Grove last year, to Frasers Proeprty to reduce its exposure to the weakening market and find a share buyback.

Domain reported Macquarie Equities' analyst Rob Freeman - who recently toured Mirvac, Stockland, Lendlease, Frasers and The Satterley Group's estates - saying sales volumes had fallen between 30 percent and 70 percent over the past year.

"Developers which relied heavily on investor channels to sell product in the upswing have suffered the most in the downturn.

"Speculators are no longer in the market, up to 20 percent of volume in the peak for some developers, and investor sales have declined significantly, in one instance investors who were 30 per cent of volume, are now at 20 percent," Mr Freeman said.

"Default rates are varied and between about 4 per cent to 7 percent, which appears to be an increase of about 200 basis points from lows with cancellations running at 10-15 percent."
The Melbourne developer and fund manager Ouson Group has onsold a 61 hectare site in Mount Cottrell in the outer west to a Singaporean group for $50 million with the capacity for between 820 and 920 lots once approved for subdivision.

The site, which lies within the proposed suburb of Rockbank South, is close to several big housing estates, including Mirvac's Woodlea Estate and Stockland's Mt Atkinson.

The Mt Cottrell site lies within Melbourne's western growth corridor, centred around Melton and Wyndham.

The research firm Red23 ranks Melton as having the highest number of trading housing projects, with close to 40 projects.




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