AV Jennings optimistic after $19m loss
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Buyers are finally returning to the new housing market after an extended slowdown, leaving property developer AV Jennings cautiously optimistic for 2013.
Chief executive Peter Summers says improvements in affordability, low interest rates, underlying housing shortages, and stable economic conditions all indicate market conditions are improving.
"Visitations are up in a lot of our projects ... (that) indicates it is an improving market out there, and in some of our projects the sales rates are up as well," Mr Summers told AAP on Wednesday.
"All these things are leading us to say that this is the time to start producing more inventory than we have for the last year."
Mr Summers made the comments after AV Jennings reported a first half net loss of $19.1 million for the six months to December 31, compared to a profit of $3.3 million in the previous corresponding period.
The net loss included provisioning for a loss on inventory of $16.1 million, 80 per cent of which related to Queensland projects, where the housing downturn had outlasted expectations.
Consumer confidence there had been shaken more than most other parts of the country, due to flooding, lower population growth, the impact of the high Australian dollar on tourism, and recent softening in the mining sector, Mr Summers said.
"The fundamentals in Queensland are still very strong, but consumer confidence remains low, and for longer than we and most of our industry competitors and forecasters have expected," he said.
Mr Summers said the builder had cut back on the number of homes it built during the first half to minimise exposure during the gloomy market conditions.
Works dropped to 318 at 30 June 2012 but had climbed back up to 554 by 31 December 2012.
"We reduced the number of works in progress we had in the system; if you don't produce inventory you can't get turnover and settlement through," he said.
AV Jennings failed to pay an interim dividend, compared to half a cent a year ago.
Its shares closed steady at 41 cents.