Property developer Stockland says real estate markets are at their worst in 20 years due to weak consumer confidence.
Stockland on Wednesday posted a net profit of $478 million for the year to June 30, a 35 per cent drop from $754.6 million in the previous 12 months.
Its shares fell on the result, down 14 cents, or 4.1 per cent, to $3.27 by 1015 AEST.
The profit fall was mainly due to the impact of low interest rates and the high Australian dollar on its hedging activities, the company said.
Underlying profit, which takes out the impact of unrealised gains and losses on financial instruments, was $676.1 million, down seven per cent on the previous year.
"These are challenging market conditions," managing director Matthew Quinn told AAP.
"I've been in the market since 1988 and I think this is arguably the most difficult housing market I've seen probably in the last 20 years.
"It should be better, because the fundamentals are relatively strong, if you look at unemployment and interest rates.
"But we are at the mercy of the cautious consumer and the fact that households are deleveraging."
Income from Stockland's residential community developments dropped in the year to June, as did income from its commercial and UK operations.
But income from retirement living developments more than doubled from the previous year.
Mr Quinn said an uncertain employment outlook and weak house prices were holding the property market back.
"I think the biggest potential swing factor is when we start to see a rise in house prices," he said.
Activity had picked up in Perth in recent weeks, but in the eastern states, where the majority of Stockland's business is located, it remained subdued, Mr Quinn said.
"We feel like there's a lot of people looking, but not transacting, they're just waiting in the wings.
"(A rise in house prices) would spur them on."
Stockland forecast a drop in its earnings per share in the 2012/13 financial year, from 29.3 cents in 2011/12.
Earnings per share were expected to improve in 2013/14 as several of the company's major property projects were completed, Mr Quinn said.
Stockland declared an unfranked final dividend of 12 cents per share, taking its full year dividends to 24 cents, unfranked.
The company expects to maintain its dividends in 2012/13.