The days of breakneck house price growth in Sydney and inner Melbourne are behind us, but property giant Stockland says it's on track to meet its earnings targets this financial year.
Chief executive Mark Steinert tips price growth in Australia's two largest cities to be flat during the next 12 months.
And although owner-occupiers make up close to three-quarters of Stockland's buyer base, Mr Steinert isn't worried that the country's big four banks have just hiked their mortgage rates.
ANZ and the National Australia Bank announced on Friday that they'll follow Westpac and Commonwealth Bank and increase their standard variable interest rates for owner occupiers next month.
"It's some movements around the margin, we don't see 25 bips materially changing demand on the upside or the downside," Mr Steinert said.
He said what may drive demand is whether people think there'll be a lot more rate increases to come.
"At the moment we don't expect that and I don't think the market does either," Mr Steinert said.
There's strong appetite for owner-occupier loan growth from the banks following the predicted pullback in investor lending, he said.
And as price growth in Australia's largest two cities finally begin to simmer, Mr Steinert has tipped Brisbane's market to show the strongest growth in the next few years.
But the company isn't backing away from Sydney and Melbourne either.
Mr Steinert said Stockland was well placed to meet its target of about 6,000 residential settlements this year.
Sales had been robust, he said, with 1,557 net deposits during the first quarter, aided by new developments planned for Sydney.
Good volumes are tipped for Victoria and Queensland while WA was expected to continue to moderate.
The developer's active projects are based in high demand, low supply sections of the market.
"We're in the growth corridors and we don't have any apartment exposure in Melbourne or Sydney," Mr Steinert said.
The group's shopping centre business, the single largest contributor to Stockland's earnings, also enjoyed a 2.8 per cent rise in comparable speciality store sales during the quarter thanks to strong sales of communication technology and homewares.
Mr Steinert said Stockland was on track to deliver underlying earnings per security growth of 6.0-7.5 per cent this year, compared to a 7.8 per cent rise in 2014/15.
The property developer is also targeting a full year distribution of 24.5 cents a security.
Stockland's trading update followed its annual results in August when the group reported a nine per cent rise in net profit to $608 million, thanks to the hot housing market.
Shares in Stockland gained two cents to $3.98.
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