Stockland has lowered its profit guidance but says it's banking on a recovery in the property market to boost earnings.
However, it can't say when there will be a turnaround in the property market.
Australia's largest listed residential development company said on Tuesday the outlook for the rest of 2012/13 was challenging, given consumer confidence was still low.
It said that although interest rate cuts had improved housing affordability, they were "not yet working".
"The market will turn - it's a question of when," Stockland said in a slide presentation to investors at a briefing in Townsville.
"Recovery is likely to be slow."
As a result, and absent an improvement in the Melbourne residential market, Stockland lowered profit guidance for 2012/13.
Stockland said underlying earnings per security (EPS) for 2012/13 were now expected to be at the lower end of the company's previously announced range of a 10 to 15 per cent decline.
In a further sign that the property market was struggling, the Australian Bureau of Statistics said on Tuesday that building approvals fell 7.6 per cent to 12,540 units in October.
Stockland residential chief executive Mark Hunter said market uncertainty and a lack of consumer confidence continued to present challenging trading conditions even though the Reserve Bank of Australia had cut the cast rate and that some state governments had reintroduced incentives to buy property.
Mr Hunter said market conditions had not improved in the difficult market of Victoria since Stockland's annual general meeting in October.
"Although the challenging market is impacting our performance in FY13, we have made good progress in diversifying our residential portfolio and we are meeting the market with more affordable products," Mr Hunter said in a statement.
Chief financial officer Tim Foster said the company would maintain its distribution at 24 cents per security even though this would be above the company's target payout ratio.
Mr Foster said the commitment to maintain the distribution reflected the company's view that 2012/13 would be the low point in its earnings, with an improvement expected in 2013/14.
Stockland reported net profit of $487 million for the 12 months to June 30, down 35.5 per cent from the prior corresponding period.
The stock closed down two cents at $3.38.