Peet temporarily pauses development spend as it awaits pre-sales

Home builder Peet Limited says trading conditions have continued to prove challenging.

“Consumer sentiment continues to be challenged by ongoing domestic and global economic uncertainty, and has deteriorated over the past couple of months,” the company says.

“While the underlying fundamentals for the residential market and Peet’s business remain sound, and the level of buyer enquiry remains relatively consistent with prior periods, Peet in common with the broad market is experiencing reluctance by consumers to make significant financial commitments in the current environment.”

Peet’s key projects include Craigieburn and Greenvale in Victoria and Gladstone in Queensland.

“We have temporarily cut back the development spend on certain projects until suitable levels of pre-sales are secured,” Peet chief executive officer Brendan Gore has told shareholders.

“This has the effect of delaying settlement revenue to future periods,” he notes.

Sales from Peet’s projects in Western Australia, Victoria and Queensland were below expectations with a total of 327 net contracted sales for the four months to October 31, compared with 668 in the previous corresponding period.

Sales contracts on hand as at October 31 totalled 1,090 for a value of $279 million, compared with 1,125 contracts on hand with a value of $289 million as at 30 June 2011.

“Consumer interest in our residential projects continues to be solid with consistent sales traffic and registrations of interest though there has been a slower rate of conversion into sales.”

Gore says that while the recent interest rate cut was a welcome first step, it had not been enough to return confidence to the residential property market.

The Perth headquartered Peet was established in 1895 and has been in the land development business for 116 years.