Residential buyer activity picking up in south-east Queensland: Stockland
Stockland has recorded an increase in buyer activity for its residential offerings in south-east Queensland since September last year, according to chief executive Matthew Quinn.
He emphasises this is only the case for the company’s “affordable” offerings and not for the market in general.
Speaking at a media briefing following the release of interim 2012 results that showed statutory profit down 28% to $307.6 million on the back of a “challenging” last six months, Quinn said there had been a pick-up up in inquiries and deposits in south-east Queensland but that certain pockets of the market such are still doing it very tough.
Quinn says the south-east Queensland market is still operating well below capacity, with underlying demand not being reflected in actual sales activity.
“Brisbane and Perth should be our strongest markets, but paradoxically they are our weakest,” he says.
“One reason for this is the surplus of stock on the market. The market got ahead of itself. But that stock is now clearing and buying activity is increasing for new product.
“The signs are much more positive for our affordable product type.”
During the presentation Quinn highlighted the healthy state of its residential division and says Stockland will achieve its full-year earnings guidance due in large part to residential sales.
“Our residential business is well positioned with 2,488 contracts on hand at 31 December 2011 (equivalent to approximately $530 million of revenue), compared to 2,288 at 30 June 2011,” he says.
“Deposits and leads are tracking well with both showing two quarters of consecutive growth – a trend that continued in January with deposits for the month higher than the average for the past 12 months.
According to Quinn, lead volumes, “the ultimate leading indicator” of future demand, are increasing at an even higher rate than deposits.
“Leads are buyers that come into sales centre and show genuine interest. There has been a substantial increase in this.”
In addition, first-home buyers are re-emerging, accounting for 40% of all leads compared with a normal ratio of between 20% to 30%.
“This is a strong signal that the market is moving,” he says.
Quinn says Stockland is focused on developing residential assets for three specific customer segments: the mass market, middle Australian and those seeking affordable housing.
“There has been a big shift in buyer behaviour in last three years.
“If it’s affordable and they need it they will buy it… If it is expensive and they don’t need they will wait,” he says.
Stockland reported underlying profit of $350.8 million, down 8% on the first half of 2011, and underlying earnings per security of 14.9¢, down 7%.
This year Stockland is celebrating its 60th anniversary.