Lifestyle Communities Rebuilds Sales Momentum Despite Softer Victorian Market

Lifestyle Communities (ASX: LIC) has reported a recovery in sales activity for the 2026 financial year, with net new home sales rising 55.4% to 216 despite continuing softness across the Victorian property market.

Statutory profit after tax was $46.9 million compared with a $195.3m loss in FY25, while operating profit after tax fell to $25.4m from $45.2m as lower settlements, reduced deferred management fee (DMF), revenue and higher expensed interest weighed on earnings.

The operating reset cut unsold inventory 55% from 269 to 121 homes and reduced net debt by $186.8m to $273.7m, while rental income increased 12.4% to $51.4m as homes under management reached 4,368.

Lifestyle’s market-led pricing approach helped reduce excess stock but moderated home settlement margins to 10.4% from 13.1%, with average revenue per settlement falling to $589,000 from $608,000.

Rebuilding Sales Momentum

Net new home sales climbed from 139 to 216 as the Way to Live brand campaign, targeted pricing and tighter conversion disciplines helped rebuild activity, although new home settlements eased from 268 to 240 because of weaker earlier sales rates.

Brand awareness rose 23% during FY26 and the conversion rate from face-to-face appointments to sales improved from about 22% to 25%, while established resales delivered 184 net sales and 171 settlements.

“FY26 was a year of rebuilding the brand and sales momentum, strengthening our foundations, and positioning Lifestyle Communities for future growth,” chief executive officer Henry Ruiz said.

"The structural opportunity for Lifestyle Communities remains compelling—Victoria's ageing population, growing downsizer market, and the affordability advantages of our land lease model continue to support long-term demand.”

Lower Debt And Inventory

Operating cash flow reached $94.9m as net development cash flow swung to $90.7m from a $7.1m outflow, reflecting inventory realisation, lower development expenditure and disciplined construction pacing.

Completed unsold homes fell from 257 to 103 during the year, with another 18 unsold homes under construction at 30 June and most communities returning to the targeted inventory range.

Planned land sales and inventory realisation supported the debt reduction, while January’s refinancing cut total debt facilities from $571.0m to $375.0m and extended weighted average debt maturity to five years.

The lower borrowings helped improve the loan-to-value ratio to 28.7% from 47.8%, while investment property value increased to $952.9m and annual site rental fees rose 4.6% from 1 July 2026.

Supreme Court Ruling

Today saw the Court of Appeal – Supreme Court of Victoria uphold the July 2025 Victorian Civil and Administrative Tribunal (VCAT) orders concerning DMFs based on home resale prices, leaving Lifestyle unsuccessful in its appeal but with an existing repayment provision already recognised.

Lifestyle had already recognised a $77.8m provision in FY25 for repayment of DMFs collected from former homeowners affected by the VCAT orders, meaning the provision was in place before the appeal outcome.

Following the original VCAT decision, Lifestyle changed its DMF model to calculate the fee from the home purchase price, pro-rated over five years to a maximum of 20%, which is also consistent with the proposed Consumer Legislation Amendment Bill 2026.

Customer choice has broadened through an Upfront Management Fee option equal to 10% of the purchase price, with 28% of net sales selecting the upfront model since its launch on 23 January.

Strong FY27 Pipeline

Lifestyle enters FY27 with a portfolio and pipeline of 5,750 homes, including 644 homes remaining in developing communities and another 738 planned from its retained land bank.

At 30 June, 214 homes in developing communities were contracted for sale and by 19 August the group held 215 contracts, of which 146 related to homes expected to be available for settlement during FY27.

Of those 146 contracts, 28 customers were booked to settle before 30 June 2027 with unconditional contracts on their current homes, 57 were actively marketing their homes, and 61 had paid deposits but not yet listed.

Settlement volumes are expected to reflect the lag from earlier sales rates, while Lifestyle is planning another community during FY27 subject to market conditions and expects about 7% cost reduction across sales, marketing, and overheads against the FY26 base.