'Relatively sudden': AV Jennings blames political uncertainty, lending clampdown for profit dive
House and land developer AV Jennings has blamed political uncertainty, "sensationalist" media coverage of the housing outlook and a “relatively sudden” slowdown in bank lending for a 90 per cent plunge in profits.
The developer, which sells house and land lots in NSW, Victoria, Queensland and South Australia, reported profit of $1.421 million for the half year to December 31, a drop of 91 per cent on the previous corresponding period where profit was $15.482 million.
“The company believes that confidence is being suppressed by a combination of political uncertainty (especially federal tax policy), sensationalist press commentary about the outlook for residential markets and the relatively sudden tapering of residential property lending appetite of banks,” company directors told shareholders.
AV Jennings warned shareholders in December its earnings would be skewed to the second half of this financial year and said new accounting standards had also affected its result.
“The result ... reflects the deferral of revenue originally expected to be booked late in the first half, together with softer trading conditions in key markets,” directors said.
Buyer confidence had “subsided” over the past six months and prices in the major established housing markets were “correcting” as a result, the company said.
The fall in prices was encouraging the return of first home buyers to the market, but that was being offset by tighter lending standards at the banks.
Buyers were no longer confident about signing a contract prior to selling their existing home, company directors said.
More to come