House and land packages group AV Jennings says a recovery in consumer confidence is starting to be felt in the building sector.

Home builder AV Jennings believes Australia’s housing market is improving as consumer confidence belatedly recovers.

But the house and land packages group, which has made a loss for two years running, says sales growth is coming off a low base.

“Whilst we remain careful in our response to the improvement in conditions, we look to the current year with a much more positive outlook for the sector,” AV Jennings managing director Peter Summers told its annual general meeting in Melbourne.

Mr Summers said consumer confidence was also starting to recover.

“The missing ingredient in recent years was consumer confidence,” he said.

“This crucial factor has now finally started to emerge.”

The start of the 2013/14 financial year has been promising, with the number of new contracts from July to October standing at 479, compared with 215 during the corresponding period in 2012/13.

“These may not all contribute to revenues during the year as generally revenues are recognised on settlement and weather and other interruptions can affect the timing of settlements,” Mr Summers said.

“However contract signings do provide a good indication of production and sales performance throughout the year.”

Historically low interest rates and benign economic conditions are also helping.

“The population continues to grow at relatively high rates, the gap in underlying demand remains as a result of underbuilding particularly in New South Wales and Queensland, … affordability continues to improve and household incomes remain ahead of house price growth,” Mr Summers said.

The builder has enjoyed sales growth in NSW and Queensland, with “solid performances” in Victoria and South Australia.

AV Jennings shares rose one cent to 59 cents at 1111 AEDT.