Home builder Cedar Woods expects property hot spot Melbourne will continue to deliver impressive sales rates, but warns prices may cool.
The property developer is on track to deliver a record result for a sixth straight year after doubling first half profit, thanks to a stellar performance from projects in Australia's second-largest city.
Managing director Paul Sadleir predicts market conditions will remain stable in Victoria, after price rises and strong sales volumes in the first half.
"We see this continuing into financial year 2017, with perhaps the slowing of price growth," he said.
The company on Tuesday reported an $18.1 million profit for the six months to December 31, double the $9.1 million for the same period last year. Revenue was $77 million, down 1.1 per cent from $77.9 million.
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The result has prompted an earnings guidance upgrade.
"We are confident that, if conditions continue as anticipated, we will deliver a full year net profit of approximately $43 million," Mr Sadleir said.
He expects a stronger second half, underpinned by pre-sales of $176 million, compared to $147 million in the same period last year.
Plus, he said, the company's projects in Victoria, Western Australia, South Australia and Queensland are in high growth corridors.
"Residential demand is supported by resilient employment figures, continued population growth and the current low interest rate environment," he said.
"Australia has recently reached a population of 24 million people well ahead of forecast. We see continued steady increases in population, driven by immigration and organic growth."
Cedar Woods says it's well positioned for growth next financial year, with new landmark projects in three states.
The Queensland market should improve following a period of relatively slow growth, and housing starts are forecast to increase in South Australia, indicating untapped demand, Mr Sadleir said.
Meanwhile, conditions continue to ease in the company's most challenging market, Western Australia.
Earnings per share were up by 98 per cent at 23 cents per share.
Cedar Woods shares were down seven cents, or 1.71 per cent, at $4.03 at 1330 AEDT.
CEDAR WOODS AIMS FOR SIXTH RECORD YEAR
* Net profit of $18.1m, up from $9.1m
* Revenue of $77m, down 1.1pct from $77.9m
* Fully franked interim dividend of 12 cents a share, unchanged
