Australia Property

[greengiraffe]

Extracts from AVJ FY6/2015 earnings report - a mass housing developer:

http://www.valuebuddies.com/thread-3051-...#pid118461

Directors believe that market fundamentals remain very positive, with continued population
growth, a low interest rate and more stable employment environment. The falling Australian
dollar is also expected to help the economy transition to more balanced growth.
Mr Summers said, “It has been disappointing to see that much of the commentary on the housing
market has focussed on extreme examples or specific micro-markets, such as parts of inner
Sydney, which are then extrapolated into the rest of the Australian market.”
“We believe that a sensible discussion around a number of points is critical. The issue of stamp
duty, a tax that was meant to be eliminated in 2000 with the introduction of GST, is one such
debate long overdue. The Company has for many years talked about the impact of government
charges and taxes and the cost of red tape causing delays that are impacting affordability,”
Mr Summers said.
Mr Summers said it was important to remember that the current market activity in new
residential housing markets in which the Company operates follows a period of sustained
downturn and lack of supply in many key markets.
“Until recently, poor consumer confidence led to a sustained period of inactivity in
many parts of Australia with reduced sale volumes. Added to this, as we at AVJennings have
been saying for a number of years, there is a significant undersupply of housing in many parts
of Australia and New Zealand. It is these two factors, pent up demand resulting
from historical low consumer confidence to transact, and a lack of land supply for over a
decade, that has seen the rebound in the New South Wales market and Auckland,” Mr Summers
said.
The markets in which the Company operates are less affected by many of the extreme
issues influencing other markets such as CBD and inner ring residential in Sydney and
Melbourne. “We do not auction property. Our prices are set to drive volume
not maximise a one off result and there is a transparent system involving banks, valuers and
a high level of competition which tempers dramatic price changes and our market is
predominantly weighted to domestic buyers and owner occupiers” Mr Summers said.
The Chairman, Mr Cheong concluded by noting that, "Directors are therefore confident
AVJennings is now in a strong growth phase. The Company is satisfied that its business
model, backed by recent acquisitions and increased funding capacity, sees it well placed to
capitalise on future demand after a long period of low consumer confidence. The population
continues to grow and the need to provide quality affordable housing to Australians and New
Zealanders remains."