CAROLYN CUMMINS August 08, 2012
Stockland's outgoing managing director Matthew Quinn described the current conditions in the residential sector as the worst he has seen in 20 years.
Speaking at a media briefing this morning, Mr Quinn, who announced his retirement last month, said looking at the fundamentals, conditions should be a lot better, "but they aren't".
"The market, 20 years ago, was 20 per cent stronger than now. We believe the structural change will be with us for some time to come and we have adopted by offering more affordable homes," Mr Quinn said.
"We have 10 of the 20 biggest housing developments in the country and with low margins, the products are cheaper to buy than rent. Despite unemployment and interest rates being at a low point, buyers are still holding out as they think prices will fall," he said.
"The market is split into three sectors, premium, affordable and rental. The premium end - the $2 million mark in Sydney - is tough, while the affordable end is poised for some growth and investors are coming back into the rental sector."
Mr Quinn said Stockland's profits were hit by NSW where sales are up but margins on those sales are down, while in Victoria it was the opposite, but sales were slowing.
He said there are signs of improvements in Perth, while Brisbane was flat.
Stockland has streamlined its business into "three r's" being residential, retirement and retail. Mr Quinn said while he was a firm believer in the future of the three asset classes, his successor will have new ideas and if they gain board approval, they may well change the strategy.
Mr Quinn said he plans to retire in February next year.