More Supply Will Lower House Prices

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Australia’s home price boom is being driven by a lack of properties rather than foreign investors, apartment developer Mirvac says.

Chairman John Mulcahy says more than half of people buying Mirvac apartments are investors, foreign and domestic, a historic high for the group.

He did not believe Australia was experiencing a housing bubble and said an under supply of properties, rather than investor activity, was driving prices.

“But the key driver of higher pricing is driven primarily by a lack of supply, particularly in Sydney,” he told shareholders at Mirvac’s annual general meeting on Thursday.

Chief executive Susan Lloyd-Hurwitz said Mirvac sold almost 2,500 residential property lots last financial year and was on track to settle 2,200 in 2014/15.

“Taking advantage of the positive residential market conditions, we are accelerating releases to over 2,700 lots in FY15, driven by our Sydney and apartment exposures,” she said.

She said Mirvac planned to divest about $200-$400 million worth of assets this financial year, following on from the $1 billion it offloaded in 2013/14.

The divestments would enable Mirvac to redeploy capital within the company, she said.

Ms Lloyd-Hurwitz said Mirvac was continuing to restock its residential portfolio and would focus on medium- and high-density urban developments.

It also planned to accelerate releases and push price when appropriate.

Ms Lloyd-Hurwitz maintained Mirvac’s previous operating earnings guidance of 12 to 12.3 cents per stapled security for this financial year.

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