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AVJennings warns of housing shortfall as profits ease

Bayside: Waterline Place, a residential development by AVJennings at Williamstown in Melbourne. Photo: SuppliedAVJennings​ predicts it will see improved second half results as developments come to fruition and the decision to switch its product mix filters through to buyers.
Nanjing Night Net

The home builder reported a statutory profit after tax for the December half of $14.1 million, down 14.4 per cent on $16.5 million from the previous period. The interim dividend was unchanged at 1.5¢ per security.

Over the period, the group has shifted its focus to more built form assets away from land sales, which accommodates the increasing demand for affordable homes across the country. Sydney remains under-supplied, while the rate of house price growth has abated.

AVJennings chief executive Peter Summers said because of development timing with the shift to built form, the earnings have been skewed to the second half.

On the subject of affordability, price growth and taxes, he said governments should not look at “short-term reactionary impacts, but rather long-term visionary policies”.

“There remains a significant shortfall in housing, particularly in traditional housing. Our focus is on this traditional housing market,” Mr Summers said.

He said the country was about 200,000 homes under-supplied, while a “new Melbourne” is needed about every 10 years to accommodate forecast population growth.

But Mr Summers said there was a risk of over-supply of inner-city/CBD apartments in Melbourne and Brisbane.

“Property continues to be one of the country’s largest industries and as Australia continues to grow, the need for housing gets greater each year,” he said.

“For our customers, the main concern in terms of confidence is employment and that remains relatively stable, as does the interest rate environment.”

New projects, such as Waterline in Williamstown, Melbourne is a mixture of apartments and townhouses and a total build-out.

“Waterline is a game changer for our Victorian operations. Having more built form will mean greater absolute margins per sale and deeper sales channels as the market for completed product is many times larger than the market for land,” he said.

Mr Summers said the group’s margins for the period were 26 per cent which is above the margins for the corresponding period last year of 23.6 per cent.

“Overall margins are always subject to differences in product mix and project mix and hence need to be read cautiously. However, it is fair to say that like-for-like margins have strengthened but at slower rates than previous years. We continue to be a business focused on volume rather than price,” he said.

This story Administrator ready to work first appeared on Nanjing Night Net.

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