Property giant Stockland is betting on Brisbane being the place to be for the next few years as Sydney and Melbourne’s booming markets finally come off the boil.
Chief executive Mark Steinert says that after years of lagging behind its southern counterparts, the Brisbane market is primed for stronger growth.
“Brisbane has got high affordability and is showing the largest spread between house prices relative to Sydney that’s been recorded in history,” he said.
“Now that we’ve starting to see jobs growth emerging in Brisbane that’s a market that we think will probably show the strongest growth in the next few years.”
Residential property prices have increased by around four per cent in the past year, a far cry form the 17.7 per cent rise in Sydney and 12.3 per cent rise in Melbourne, according to CoreLogic RP Data.
The strength of the housing market helped lift Stockland’s underlying profit more than nine per cent to $608 million during the 2014/15 financial year.
A boom in Brisbane would be great news for Stockland, which has thousands of new lots due to come onto the market in the next few years.
That includes the 20,000 home Caloundra South project on the Sunshine Coast, the company’s biggest ever residential development.
The company isn’t backing away from Sydney or Melbourne either – with a pipeline of major developments underway in both centres – though Mr Steinart doesn’t expect the runaway growth of recent years to continue.
“Some of the sub-markets where you’ve seen this very strong growth, we think that’s going to slow down somewhat but we certainly don’t foresee any collapse in the market,” he said.
He said a lack of new construction in the years following the global financial crisis coupled with population growth and a reasonable, if not upbeat, outlook for the economy meant demand for new housing developments would remain strong.
“We see an undersupply in all of the metropolitan markets in Australia, we’ve been under-building for some time and particularly post-GFC,” he said.
“So what you will continue to see is relatively high levels of construction and relatively high levels of sales activity as a result of that.”
For the year ahead, Stockland has forecast 6.0 per cent to 7.5 per cent growth in underlying earing per security and distributions of 24.5 cents per security.
Stockland’s shares finished two cents, or 0.48 per cent, higher at $4.18.
HOUSING MARKET LIFTS STOCKLAND
* Underlying profit up 9pct to $608m
* Funds from operations up 13pct to 28 cents per security
* Unfranked final distribution steady at 12 cents per security