Stockland not worried about mortgage rates

16.Stockland not worried about mortgage rates

By Stuart Condie

Sydney

(Australian Associated Press)

Property giant Stockland is confident that mortgage rates will stay low despite the recent hikes by the country’s big four banks.

ANZ, National Australia Bank and Commonwealth Bank last week followed Westpac in increasing standard variable interest rates for owner occupiers from next month, but Stockland chairman Graham Bradley doesn’t anticipate rates rising by much more over the 2016 financial year.

“We see continuing strength in the residential housing market due to continued population growth and existing undersupply, supported by low mortgage interest rates which we believe will continue for some time into the future,” Mr Bradley told the company’s annual general meeting in Sydney.

Mr Bradley said Stockland is aiming to increase distributions to 24.5 cents per security from 24 cents in FY15 and is focused on generating good returns for investors rather than aggressively pursuing growth “for its own sake”.

“We have tended to be pioneers in the affordable end of the housing market,” Mr Bradley said.

“It’s more expensive in some cities like Sydney than it is Brisbane or Melbourne but, with continued low interest rates, housing is actually quite affordable now relative to people’s income.”

Managing director Mark Steinert said economic conditions simply didn’t support a view that rates will keep heading up.

“We believe we’ll continue to see below average levels of economic activity, but economic activity nonetheless, and below average levels of wage growth,” Mr Steinert said.

“While unemployment is not high, there is a degree of potential in the economy and in that environment you don’t normally see rates being increased.”

Mr Steinert said the Reserve Bank of Australia was unlikely to be inclined to raise the cash rate even if the US Federal Reserve did hike its rate, a move that could happen this week but is now more likely early next year.

“I don’t think Fed will raise for some time,” Mr Steinert said.

“Even if they do increase a little bit, the Reserve Bank would be happy to see the consequent ripple effect of a lower dollar helping many of our industries.”

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