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Mirvac reports fall in residential sales

“In the middle market, where were are focussed on affordability and liveability, we have seen a pick up in inquiries,” Mr Steinert told the Sydney Morning Herald and The Age.

“There was a low in March but that has been trending up. A lot of our buyers remain employed and are taking advantage of the low interest rates and easing on credit by the banks.”

Mr Steinert said the sharp reduction in housing starts would result in a lack of supply in the coming year. He declined to comment in depth on prices, as the group is due to issue its March quarter results in May.

Mirvac, the nation’s largest medium-density dwelling developer, issued its quarterly results on Thursday, and revealed settlements fell to 127 from the peak for the year-to-date in January of 270.

Overall, Mirvac settled 1818 residential lots for the year to March 31, boosted by 537 at St Leonards Square, Sydney, 206 at Woodlea in Melbourne and 28 lots at Verde, the first building at Pavilions, Sydney Olympic Park.

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At the group’s half-year results in February, Mirvac chief executive Susan Lloyd-Hurwitz said the group was on track to achieve over 2500 settlements for the year to June 30, and that 86 per cent of expected 2020 financial year residential earning before interest and tax (EBIT) had been secured.

“Our defaults remained below 2 per cent and we have maintained a high level of residential pre-sales
at $1.1 billion,” Ms Lloyd-Hurwtiz said.

“In March, the landscape became significantly more challenging, with the COVID-19 outbreak causing our sales offices to close and sales leads to fall off the back of a general decline of consumer confidence. While our Residential team was well prepared for this, and quickly transitioned to virtual sales offices and private viewings by appointment, we expect these challenges to continue in the coming months.”

Taking advantage of the new rules by the NSW government to fast-track shovel-ready developments to keep construction on track, Mirvac is working to get deals through the various stages of the planning cycle, “which will help Mirvac to rebound as quickly as possible, and support the wider economic recovery”.

One is the landmark site in Willoughby that was occupied by Nine Entertainment, owner of this newspaper. There is a concept plan approval for the development of 460 new dwellings and about 6000 square metres of public open space.

Macquarie Equities analyst Darren Leung said Mirvac’s decline in sales and enquiries activity was expected.

“While presales were maintained at $1.1 billion, compared to the $1.2 billion at the end of December 2019, we highlight pre-sales are not at the same levels they were heading into 2018/19, so residential earnings will be more closely correlated with sales/enquiries into the medium term,” Mr Leung said.

Lendlease chief executive Steve McCann confirmed during the week that there has been a reduction in short-term demand for acquisition of projects like communities, “so enquiry levels you would expect to be subdued. We’re seeing that. So that will take a little while to play through”.

“We’re not overly exposed to ongoing settlements in the short term for our business on residential build to sell. But we are watchful of whether there are delays that emerge there as well,” he said.

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