A lack of housing supply, rather than foreign or domestic investors, are driving house prices, property developer Mirvac says.
The company on Thursday re-affirmed its full year earnings guidance, maintaining its target to grow earnings by between 12 and 12.3 cents per share for the 2014/15 financial year as it seeks to take advantage of buoyant housing markets in Sydney and Brisbane.
Chief executive Susan Lloyd-Hurwitz said Mirvac planned to release 2,700 residential lots during the year to take advantage of booming demand.
She said a housing supply shortage, rather than investor activity, was driving property prices and that Mirvac had seen no evidence of a housing bubble, nor that foreign investors were pushing first-home buyers out of the market.
She said Mirvac was very disciplined about how much it sold offshore.
“There is a fundamental undersupply and the excess demand, driven by immigration, primarily, is driving the market – it’s not about foreign investment or investor activity,” Ms Lloyd-Hurwitz said on Thursday.
“In terms of the supply that’s currently in the market, some of our modelling suggests that if the market as a whole continued to supply the amount of supply now for the next 10 years, we still wouldn’t soak up the demand.
“The reason why we’ve embarked on this accelerated release program, particularly focused around Sydney and apartments is because we want to move as quickly as we can while the market continues to run.”
Mirvac chief investment officer Brett Draffen said any regulatory intervention to curb investor activity in the housing market, as recently flagged by the Reserve Bank, would need to be carefully targeted.
“I don’t think we’re talking about mainstream changes here because I think that would be quite risky in terms of the overall impact,” he said.
“What we’re talking about is, perhaps, some tweaking around the edges just to take a little bit of the heat off. But we don’t see that would make a massive impact to the residential markets and, therefore, to our portfolio.”
Mr Draffen said the number of investors in Mirvac’s portfolio, as well as the wider economy, was at the higher end of what would be considered the normal band.