Property developer Stockland is hoping healthy housing market conditions will underpin its business next year, with Sydney and Queensland leading the charge.
Property price growth is expected to slow from the rapid pace witnessed in the past 12 months, Stockland chief executive Mark Steinert said on Monday.
But population growth and an undersupply of houses would ensure the residential market remains “healthy” in 2015, with Sydney in for a “golden decade” of above-average growth.
While home prices rose 10 per cent in the year to June, according to the Australian Bureau of Statistics, Mr Steinert expects that pace will slow to about one per cent, in real terms.
“We don’t expect the rate of price increases we’ve seen in the last 12 months to continue at that rate,” he said on Monday.
“But overall, we’re constructive on real estate markets more broadly and think that will underpin our business.”
His comments came as Stockland flagged higher earnings after lifting its full year profit five fold in 2013/14.
Stockland’s net profit rose to $527 million in the year to June 30, up from $105 million in 2012/13 when its accounts were hit by a major writedown.
Excluding the effect of that writedown, Stockland’s underlying net profit rose 12 per cent to $555 million.
The developer has is targeting earnings per security growth of between six and 7.5 per cent this financial year.
The head of Stockland’s residential business, Andrew Whitson, head, said the Sydney market remains strong with limited stock pushing up prices in the established housing market.
Victoria was steady with good demand balanced by higher competition, and Western Australia had moderated although demand remained above the long-term average.
The five-year outlook for Queensland was also strong.
“The outlook in Queensland is particularly strong, underpinned by positive economic indicators and a slower start to the housing market recovery,” Mr Whitson said.
Mr Steinert said ongoing strength in the housing market and moderate economic growth would drive improved performance in Stockland’s shopping centre and logistics and business parks businesses.
The company flagged two to three per cent growth in net operating income for its commercial property division, and an improvement in retirement living unit turnovers.