The Tamawood Limited (ASX: TWD) share price is down 4% to $3.95 in trade today after the homebuilder warned that a ‘perfect storm’ in Australia’s residential property markets was set to send its H1 Fy 2019 profit 27% lower than the prior corresponding half.
In an announcement today, Tamawood’s chairman flagged a long list of complaints about conditions in Australia’s housing markets, including:
- That land prices have not fallen in line with house prices
- the Royal Commission had left potential customers “unable to obtain finance”
- the Labor party’s policy on banning negative gearing was hurting investor confidence
- The Queensland Building and Construction Commission’s changes to regulations were hurting homebuilders
- The change in prime minister in Australia hurt confidence
- The wet weather deterred buyers
The company also admitted it was “too slow” to adjust to the changing conditions in Australia’s housing markets, but reminded investors it has no debt and has been able to ride out property market cycles for 28 years.
It also reported that the interim dividend was likely to remain at 11 cents per share, but that the final dividend was likely to be cut due to the weaker performance.
Elsewhere the big home loan lenders like National Australia Bank Ltd (ASX: NAB) could be forced to cut dividends if their profits are hurt by rising costs and slower credit growth.
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The Motley Fool Australia owns shares of National Australia Bank Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.