New housing sparks Stockland sales spike

Residential property and retirement living are on track to help deliver a strong full-year result.

Stockland's waterfront townhome community at Birtinya on the Sunshine Coast 'Sway'.

Development giant Stockland has recorded a 60 per cent spike in new housing sales in the last three months of 2019, with residential property and retirement living on track to help deliver a strong full-year result.

The bottoming of the housing market at the start of the financial year and its subsequent, fast-paced revival helped the developer deliver a 68.1 per cent increase in profit to $504m though the first half of the FY20. However, the true effect of the bounce back is not expected to be felt until the second half of the financial year and extend into FY21 as lots settle.

Stockland chief executive Mark Steinert said the improvement in the sector has been very strong. He also flagged a significant lift in residential profit in the second half of this financial year, attributed to a combination of improved sales and the recognition of profit from the divestment of The Grove and Merrylands Court projects in Sydney and recognition for the partnership that we did on the Sunshine Coast with the Capital Property Group.

“We have indicated in this release that in FY21, we expect this a significant lift in settlement volumes to over 5800, which is moving up towards the top of the cyclical range that we've seen historically,” Mr Steinert said.

Funds from operations increased by 5.6 per cent to $384m through the last six months of the year, with net tangible assets valued up 2 per cent to $4.12 per security.

The company’s residential portfolio showed funds from operations fell 6 per cent to $134m through the first half, with 2158 lots settled. More lots are expected to be settled in the second half of the year.

“Our strong pipeline of active projects and a reputation as Australia’s leading community creator means we are well-positioned to meet increasing demand, and with over 4200 contracts on hand we have good visibility of settlement volumes in FY20,” Mr Steinert said.

Retirement living will likely get a boost from the pick-up in residential property, as over 55s look to downsize. Stockland recorded a 12 per cent in sales within established communities through the first half of the financial year. The portfolio was down 13.8 per cent in the reported period, but pick up is expected in the second half of the financial year as several villages settle.

Stockland’s retail town centres recorded strong performance for the first half of the financial year with growth of 0.7 per cent to $209m, as the company looks to rebalance its commercial portfolio.