After a pause in recent years, the latest report indicates that the cost of vacant residential land in Australia is back on the rise as supply pressures continue to mount.
Published by Housing Industry Association in Conjunction with real-estate information analytics provider RP Data, the latest HIA/RP Data Residential Land Report shows that while land sales volumes throughout Australia contracted by 4.7 per cent in the March quarter of this year, median prices of vacant residential lots increased by two per cent.
Indeed, while price pressures remain relatively modest in rural and regional areas (up 0.7 per cent in the quarter and 2.4 per cent year-on-year), those in capital cities continue to intensify, with the weighted average median lot prices across all eight surging by 3.3 per cent in the quarter and 7.5 per cent compared with the March quarter of 2013.
Housing Industry Association chief economist Harley Dale said the latest report raised concerns not only that the drop in land sales indicated a tightening in land supply which would constrain the upward cycle in residential construction but also about the acceleration of land prices in capital cities.
“The upward trajectory for residential land prices since mid-last year is steeper than it should be,” Dale said. “There is clearly a policy failure this cycle, as in many before it, to ensure a supply of shovel-ready land commensurate with the demand for new housing.”
RP Data research director Tim Lawless agreed, saying the early peak in sales of vacant residential land casts doubt over expectations about the capacity of new housing construction to help support the nation’s economic transition away from resource and infrastructure projects.
While Sydney remains the nation’s most expensive capital area to purchase vacant residential land, Richmond-Tweed in New South Wales is the most expensive regional area whilst Mersey-Lyell in Tasmania is the least expensive market.
Gold Coast remains the nation’s hottest market by land sales volumes over the past six months, followed by South Australia’s south-east and Richmond Tweed in New South Wales, but sales in the previously red-hot Kimberly region of Western Australia, at the other end, have plummeted 79 per cent over the past six months the accommodation demands of resource construction workers recede.