Mirvac affirms profit guidance as sub-$1 million median density attracts buyers
Low residential vacancy rates and rising rents were evidence of strong underlying demand, with residential property markets improving as buyers sought out medium-density housing, according to Mirvac Property Group.
The group’s development division reported yesterday it was on track to settle 1,800 residential lots in the 2013 financial year.
It was in line with fiscal 2012. It has had the settlement of 331 lots as at September 30, 2012.
NSW was Mirvac’s strongest market, while Victoria’s property market has underperformed. The Queensland market remained patchy but would lift towards the end of the year, driven by increasing interstate migration and investment by resource companies, Mirvac chief executive officer development Brett Draffen advised.
"Dwelling approvals in New South Wales, after an initial recovery following the global financial crisis are now increasing close to their pre-GFC levels.
"The low rental vacancy rate and solid rental growth points to strong underlying demand.
"In conjunction with the improving housing market fundamentals, the announcement of land supply measures by the state Government and incentives for first time purchasers of new properties should provide a further boost in demand.
"Following a post-GFC uplift, the Victorian property market had become more subdued, as evidenced by slowing volumes and falling prices; more so for houses than medium density accommodation. The appreciation of the Australian dollar has continued to suppress the state’s manufacturing sector, with investment still biased towards the resource states.
"While the improving fundamentals will boost the property market, Victoria is still likely to under perform the other main states (New South Wales, Queensland and Western Australia)."
Mirvac advised 85% pre-sales at Yarra Point, in the Melbourne Dockland and 43% pre-sold in the Yarra’s Edge, Array project.
With 80% of Mirvac's residential properties priced below $1 million, Mirvac said its medium-density product was in demand, particularly in the south-eastern states.
“The combination of soft property prices and lower borrowing costs have resulted in an improvement in housing affordability while home ownership is becoming financially attractive compared to renting,” Brett Draffen says.
“This trend is expected to gain momentum given housing affordability, the changing preference of new migrants, the aging of the population and increasing incidence of small households,” Draffen says.
Mirvac also noted its focus on the office sector and regional shopping centres was working in subdued market conditions.
Reaffirming its guidance for flat growth this financial year, Mirvac said it expected the group's 2012/13 operating profit to be between $366 million and $370 million.
Mirvac reported operating profit after tax of $366 million for 2011-12.