Stockland warns again on new home sales

The RBA campaign to lift housing investment takes another blow this morning with Stockland warning again, especially about Victoria:

Stockland today updated investors on the current state of the market at its first quarter investor briefing in Townsville, highlighting in particular that there has been no improvement in the challenging Victorian residential market since the company’s AGM in October.

Unless the Victorian market improves soon, which seems unlikely, Underlying Earnings Per Security (EPS) for FY13 will be at the lower end of our previously guided range of 10-15 per cent below FY12. EPS decline will be even greater in the first half, primarily due to a large skew to the second half in the Residential business.

…Group Executive and CEO Residential Mark Hunter acknowledged recent interest rate cuts and the reintroduction of first home buyers’ grants in NSW and Queensland, but said market uncertainty and a lack of consumer confidence were continuing to present challenging market conditions, which were particularly apparent in the Victorian residential market.

Building approvals later today will be interesting.

Comments

  1. I know it’s totally off topic but may I congratulate you guys on your continued efforts with the related images in your articles. Often bring me to a smile.

    As for Stockland. Well that makes me smile more. They should stick to retail property. Might just come out alive.

  2. Stocklands, you forgot one other thing, PRICE, not just confidence and uncertainty.

    Basically Stocklands is confirming that the market is going to crash 🙂

    • The stand off is getting interesting. Businesses on the one side not wanting to lower prices and consumers increasingly on the other not wanting to pay current prices… Will the drop in interest rates convince some people to cross the spread?

      • Only a small number of marginal buyers will be enticed by lower rates. The problem of affordability will remain insurmountable for the rest.

      • Exactly. If the series of cuts to date hasn’t boosted sales, why will one more?

        Plus there is an increasing awareness in the community that “rates are being cut because the economy is in trouble”.

        And thus, a bad time to get up to your neck in debt.

      • The most interesting bit is the extent to which comments common on MB are popping up across comment sections on the MSM sites. (and i am not talking about those of us who wander over to other sites to encourage debate and discussion)

        More and more people seem to be doing their own wider reading and questioning received wisdom.

        A huge change does not require a large % of the population – it just needs a growing proportion of those people who influence their families and friends.

        If those people are reading blogs like this then this stalemate could get very interesting.

        Hopefully, it will be broken in a productive manner. Namely, house prices softening as new housing where people want to live gets built by ex- mining tradies etc as the mining boom loses some of its sizzle.

  3. Prices are too high. WAY too high. The question is, can they drop them, even if they wanted to?

    A wipeout is coming.

    • Developers who paid boom time prices may find it hard to cut prices.

      That is why the govt should approve new land so it can be purchased at lower cost by new companies and brought to market at prices that undercut the existing developers who are desperately trying to maintain current prices and are demanding that interest rates solve the problem of unaffordable repayments..

  4. I had the pleasure of touring a new estate in the outer West recently and I couldn’t believe the tiny hankerchief-size blocks and cheap looking houses with no awnings or eaves. They must boil in those houses in the summer and freeze in the winter.

    Added to that is the total lack of anything like bike paths, public transport and outdoor recreational amenities – and they pay through the nose for that ? No wonder developers can’t sell them any longer.

    • The other problems developers are finding is the newest estates are actually much better designed and therefore the existing stock on the market is virtually unsellable. The most recent release in Melbourne called “The woods” has sold like hotcakes as it is both better designed and cheaper than most of the rest of the stocks.

  5. The property ponzi scheme is dead.. The banks turned home ownership into a casino… but the roulette wheel has stopped and they’re all standing there looking like deer in the head lights!

  6. GunnamattaMEMBER

    I reckon you will find that like all great horror stories the real terror only comes when the monster comes back to life after having been ostensibly slain.

    ….My money is on the open encouragement of overseas investors.

    • dumb_non_economist

      Agree, and those who are caught in the bind of home ownership debt investor or otherwise, are not going to complain.

      • GunnamattaMEMBER

        which may have some interesting implications….

        Australia can become the Cyprus or Spain for Asia (everyone has villa apartment or house there to spend about 3 weeks each year – otherwise they tend to sit vacant being ‘managed’ by locals)

      • No sure about holiday villas in Craigieburn or most of the rest of Stockland’s sites in Melbourne.

      • I thought they did this on Sunday night?

        ABC news had an item about opening up the borders to rich Chinese.

        There are no upper age restrictions and no checks on whether the money is laundered or proceeds of crime. All the person has to do is buy a house and spend 40 days a year in the country.

        I was surprised that there was no uproar about it in the Monday papers.

        Looks like a way bring investors into Australia and prop up the upper end of the property market.

        I only caught the end of the news item but I think they had to have a minimum of $5 million to qualify.

      • Perhaps they can restrict their purchases to the Melbourne fringes – should get a fair bit for AU$1m.