DESPITE protestations by the Reserve Bank governor about the affordability of the Australian housing market, the country's biggest housing developer said yesterday that conditions were the weakest it had experienced for 20 years.
Stockland managing director Matthew Quinn said the new housing market remained soft, and lower mortgage rates were not yet having the same positive effect as occurred in previous cycles.
"I've been in the market since 1988 and I think this is arguably the most difficult housing market I've seen probably in the last 20 years," he said. Mr Quinn saw signs the market was near the bottom but he thought the recovery was likely to be slow because consumers remained cautious.
He attributed the tough conditions to three factors jobs, interest rates and the price of houses.
Reserve Bank governor Glenn Stevens said last month that, in his opinion, house prices were not unreasonably high.
"Australian dwelling prices on a national basis have in fact declined and are now about where they were in 2002. That is, housing has become more 'affordable'."
Mr Stevens' opinion was supported by data released yesterday by the Australian Bureau of Statistics that showed the value of all home lending rose by 2.4 per cent, with owner-occupier loans up by 1.2 per cent while investment loans rose by 4.9 per cent.
The commercial sector is also in the doldrums. National Australia Bank's commercial-property survey for the June quarter showed a slip in its Commercial Property Index to a new low of minus 16 points, showing that fewer property professionals expected positive capital or income returns.
The report said retail and industrial market participants were extremely pessimistic. Expectations were also softer in office and CBD hotel markets.
Stockland, having spent the past four years streamlining its strategy to focus on residential, retail and retirement, is now being hit as investor spending retracts on all three fronts.
Mr Quinn said the short-term earnings outlook was "highly uncertain". He said that unless the residential market improved significantly in the next few months: "The 2013 financial year EPS (earnings per security) is likely to be lower than in the year to June 30, 2012."
Despite a fall in EPS, the current 24? distribution would be maintained. This would be done by increasing the payout ratio, if needed, beyond the current 85 per cent maximum, rather than from improving sales.
As the group flagged in July, excluding one-off adjustments, underlying net profit for the year fell 7 per cent to $676.1 million.