Home builder AV Jennings has lifted its first half profit by 39 per cent and expects demand for new houses to remain robust for some time.
The house and land packages group made a net profit of $16.5 million for the six months to December 31 and expects a stronger second half.
Chief executive Peter Summers says there’s no signs of an oversupply in the market for traditional homes.
“We believe there continues to be pent up demand for detached and medium density housing, particularly in east coast capital cities and Auckland,” he said.
The company said it has no exposure to the volatile high-rise apartment market and minimal reliance on foreign buyers.
“The important drivers of demand in our markets are quite different from those affecting markets for CBD apartment towers and inner-ring established housing,” Mr Summers said.
AV Jennings said continuing low interest rates and inflation, strong consumer confidence and stable employment conditions in the east coast cities were all helping fuel demand for new homes.
Population growth and housing shortages in Sydney, Melbourne and Auckland were also helping, the company said.
During the first half, buoyant markets in NSW, Queensland and Auckland helped AV Jennings boost revenue by more than 50 per cent to $187.2 million.
Contracts signings for new homes rose 14.6 per cent to 999 lots, with settlements up by more than five per cent to 694 lots.
AV Jennings reaffirmed its forecast for new contract signings of 1,800 to 2,100 lots for the full year.
Shares in the company closed up two cents at 57 cents.
AV JENNINGS CONFIDENT ON OUTLOOK:
- Half year net profit up 39pct to $16.5m
- Revenue up 58pct to $187.2m
- Fully franked interim dividend of 1.5 cents, up from one cent