Home builder cautious over war impact on supply chains
One of Australia’s largest housebuilders is monitoring the potential impacts of conflict in the Middle East on its supply chains after reporting a rise in property sales.
Mirvac, which specializes in apartments and residential communities, saw a 12 percent increase in sales in the third quarter, with almost 600 lots changing hands.
In the year ending March 31, home sales increased 28 percent, with almost 1,900 lots flipped.
Chief executive Campbell Hanan said sales remained resilient in NSW, Queensland and Western Australia, although there had been some slowdown in activity in recent weeks.
“We are monitoring the potential impact of the conflict in the Middle East and proactively managing risks,” he told investors.
Focusing on managing supply chains and maintaining liquidity, Mirvac also faced rising oil prices due to the US war against Iran, which started on February 28 and increased the cost of construction work.
Additionally, while sales of selected projects slowed heading into April after 281 sales were recorded in March, “enquiry levels remain strong”.
“Our active projects are on track,” Mr. Hanan said.
“Overall, we have good visibility into earnings for the remainder of the fiscal year.”
More broadly, the housing market has seen some signs of a slowdown in sales activity in recent weeks. Following the central bank’s back-to-back interest rate hikes in February and March.
Last weekend was the third week in a row that auction approval rates fell below 60 percent due to sales pullbacks, according to market researcher Cotality.
The long-term average liquidation rate is around 64 percent, with 70 percent indicating a seller’s market and less than 60 percent indicating a buyer’s market.
Mike Zorbas, president of the Property Council, said the cost of building materials such as PVC pipes had risen by up to 36 percent since shipping traffic across the Strait of Hormuz was halted due to the war.
“In an environment where costs are high and confidence is fragile, even relatively small increases in uncertainty can delay or halt projects before construction begins,” he said.
Mirvac’s stapled bonds fell 1.5 percent to $1.75 during morning trading on the stock market.
In February, Mirvac reported a five per cent increase in 2025/26 first half net operating profit to $248 million.
Its portfolio also includes office buildings, industrial assets, retail centers and build-to-rent projects.
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