Listed developer Stockland says it expects lower land settlements at one of its major Melbourne developments, while announcing defaults have also increased.
Stockland said defaults have increased in the fourth quarter to five per cent, above long term averages of 3 per cent, it revealed.
In its latest announcement, Stockland also said it expects settlements of 5900 lots at its Melbourne Mt Atkinson estate for the financial year, this is below its target of 6000.
Australia's largest listed developer said the lower settlements were due to production delays and extended settlement timeframes that would push it out to fiscal 2020.
In its latest announcement, the company said it expects lower residential sales in the second half to impact settlement volumes in the 2020 financial year.
The announcements were made as part of Stockland’s 2019 investor day presentation.
Earlier this year, in its update for the third quarter Stockland announced its home sales had declined 26 per cent for the last quarter, but that it was "still optimistic about achieving its residential settlement targets" and was relying on a settlement skew to the second half of 2019.
While the company said enquiry levels were recovering in Sydney and Melbourne, “where the downturn had been deepest”, Perth and south-east Queensland remain flat.
“Following challenging market conditions, sales rates remain low, expected to result in fourth quarter 2019 net sales around 700 lots,” the company said in its announcement.
While Stockland noted that sentiment had been improving, it said market inventory levels may take time to normalise.
Despite the delayed settlements, Stockland said it would maintain residential profits in line with expectations and keep operating margins above 18 per cent for the full year.
The group said purchaser confidence was returning, but expects the market to “remain variable” for the rest of 2019.