Stockland has 12 per cent jump in house sales value as demand rises

Demand for home and land packages is surging, says Australia’s biggest developer of home estates Stockland, with buyers paying 12 per cent more on average for a package.

The number of inquiries the ASX-listed $10.2 billion group receives has returned to pre-COVID-19 levels, and the conversion to sales is expected to improve as the interest rate outlook stabilises, the group said.

The group forecast 3000 more settlements for the June quarter alone, which would meet its guidance of 5500 for the financial year.

Stockland CEO Tarun Gupta at the NHFIC’s State of the Nation’s Housing 2023 report event at the Sydney Masonic Centre.Credit: Dominic Lorrimer

The Reserve bank board meets next Tuesday to decide on its next rates move, as Wednesday’s Australian Bureau of Statistics figures showed inflation, the key reason for pressure on rates, rose by 7 per cent in the year to March, down from 7.8 per cent over 2022.

The official cash rate was kept at 3.6 per cent in April after more positive jobs data and flat retail spending prompted the bank’s board to opt out of an 11th straight rate rise.

ANZ Bank upgraded its housing price forecast on Wednesday, given improved auction clearance rates, strong population growth and the recent lift in prices.

‘Stockland is on track to deliver on our 2023 guidance. Our focus on operational excellence continues to deliver strong performance across our diversified portfolio.’

Stockland CEO Tarun Gupta

“We now expect capital city housing prices to end this year unchanged before a modest rise in 2023,” the bank said in a research note.

Overall, Stockland has 6443 signed contracts at 12 per cent average pricing compared with the December half.

For the third quarter ending in March, sales hit 1049 lots – a 9 per cent jump on the previous quarter and almost 24 per cent higher on the September 2022 quarter, which appears to be the low point in the cycle.

Stockland chief executive Tarun Gupta, who was a speaker at the National Housing Finance and Investment Corporation forum on affordable housing in Sydney on Wednesday, said the developer of master-planned communities business showed continued improvement over the quarter.

“Stockland is on track to deliver on our 2023 guidance. Our focus on operational excellence continues to deliver strong performance across our diversified portfolio,” Gupta said.

But when looking at the same time last year, the rate of sales were down, showing the pullback since interest rates started to rise. This is consistent with the group’s outlook in the first-half results issued in February.

Macquarie Equities’ analysts said given time remaining in the 2023 financial year and line of sight on settlements, “we see little downside risk to settlement guidance”.

As part of its push into affordable housing, Gupta created the group’s land lease business, where Stockland owns the land and rents out the property, which resulted in net sales of 50 homes for the third quarter. This reflected the staging of releases to allow production to catch up with demand.

Gupta said Stockland’s coming land lease project launches are supporting “elevated inquiry levels, demonstrating ongoing demand for land lease community living”.

But he told the forum that while it was the biggest lever, “increasing the supply of private housing on its own will not solve Australia’s affordability crisis”.

“It requires action across the entire housing continuum – from investment in social and affordable housing, build-to-rent and shared equity, to the sale of private houses – and diversity of product to suit people’s lifestyles and life stages.”

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