Home builder AVJennings has shrugged off a drop in full-year profits, saying its has a strong pipeline of projects that will start to boost revenue and earnings within two years.
AV Jennings managing director Peter Summers expects more contracts for new homes to be signed in 2017/18 but said new projects will take longer to recognise a profit on.
"In terms of revenue and earnings, it is in 2019 and 2020 - those financial years - that they will all be impacting the strongest," Mr Summers said as AVJennings delivered its 2016/17 results on Friday.
For the current financial year, the company expects to secure contract signings for 1,900 to 2,100 lots - up from 1,843 lots in 2016/17.
Demand for land, houses and apartments remains strong, especially in Sydney, Brisbane, Melbourne and Auckland, as consumers continue to take advantage of low interest rates and low inflation.
The company also is exploring opportunities to supply social housing.
AVJennings' net profit for the year to June 30 dropped 12.7 per cent to $35.7 million but the company says it has strong momentum.
Mr Summers said work-in-progress continued to rise in the 2016/17 financial year - up by 28.6 per cent - as did the number of contract signings, especially in the second half.
He said profit in the 2016/17 was lower because projects that had driven growth in prior years had reached more mature levels, and new projects of significant scale were started but will take time to reach profit recognition.
Also, heavy rain on the east coast of Australia and delays in title issuance delayed construction and contract settlements.
The company said that if it hadn't been for the impact of the heavy east coast rain during March and April, and delays in title issuance which postponed the settlement of around 98 contracts, the profit for the 2017 full financial year would have been similar to that for the prior year.
Mr Summers said current high housing prices reflect a lack of supply, which he blamed on the lack of land releases and infrastructure, planning delays and uncertainty, and significant increases in government charges and taxes.
Mr Summers said government policy "continues to frustrate and worry".
"While governments talk about their concern in relation to affordability, taxes and charges from government authorities continue to increase," he said.
AV Jennings shares were one cent higher at 73.5 cents at 1242 AEST.
MATURE PROJECTS, RAIN, DELAYS HIT AVJENNINGS PROFIT
* Full-year profit down 12.7pct to $35.7m
* Revenue down 4.8pct to $401.6m
* Final dividend of 3.5 cents, fully franked, unchanged
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