Where RBA sees affordable homes, Stockland's Quinn sees a tough market

Stockland's managing director Matthew Quinn said that the market for new housing remained soft and lower mortgage rates were not yet having the same positive impact as 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. "But we are at the mercy of the cautious consumer and the fact that households are deleveraging."

According to Mr Quinn, there are signs the market is near the bottom but recovery is likely to be slow because consumers remain cautious and lack urgency.

In contrast, the governor of the Reserve Bank, Glenn Stevens, last month dismissed talk of a housing bubble, adding that, in his opinion, prices were not unreasonably high.

"It has to be said that the housing market bubble, if that's what it is, seems to be taking quite a long time to pop - if that's what it is going to do," he said.

"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's opinion was supported by data released yesterday by the Australian Bureau of Statistics, which showed that 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.

In his commentary on Stockland's full-year result, Mr Quinn, attributed the tough conditions to three factors - jobs, interest rates and home prices.

The commercial sector is also under pressure.

NAB released its Quarterly Australian Commercial Property Survey June 2012. Its commercial property index slip to a new low of -16 points as fewer property professionals expect positive capital or income returns.

The report says retail and industrial market participants are pessimistic, but expectations are also softer in office and CBD hotel markets.

As for Stockland, having spent the past four year streamlining the group's strategy to focus on the residential, retail and retirement sectors, the group is now being hit as investor spending retracts significantly in all three.

Without issuing a specific guidance number, Mr Quinn said the short-term earnings outlook remained "highly uncertain".

He said that unless residential market conditions improved significantly within the next few months, "the 2013 financial year earnings per security [EPS] 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, but done so by increasing the payout ratio, if needed, beyond the current 85 per cent maximum, rather than from improving sales.

As the group had flagged, for the year, excluding one-off adjustments, the underlying net profit fell 7 per cent to $676.1 million, out of which the annual distribution of 24? was paid.

Macquarie Equities analysts said they had been expecting residential margin pressure to come through, "however the actual result and the 2013 outlook is even worse than what we were anticipating".