Demand for vacant residential land eased during the December quarter but remained at elevated levels as property owners rushed to capitalise on the Commonwealth HomeBuilder program, the latest report indicates.
Releasing their latest Residential Land Report, Housing Industry Association and CoreLogic have provided updated information on sales activity in 51 housing markets across Australia, including the six state capital cities.
According to the report, the overall number of vacant residential lots which was sold declined by 19.4 percent in the December quarter following a surge during the September quarter which occurred as buyers rushed to secure land in order to sign building contracts in time to capitalise on HomeBuilder.
Still, volumes remained at elevated levels and were higher compared with the December quarter of 2019 by 46 percent.
Median lot prices were up only 0.3 percent year-on-year but rose by 4.1 percent during the quarter
The increase is the first sign that demand from HomeBuilder is flowing through into higher land prices – changes with regard to which can lag behind fluctuations in demand on account of the length of settlement periods.
HIA Economist Angela Lillicrap said the high volume of land sales reflected a surge in demand for detached homes as detached house building approvals soared to record levels in the second half of last year.
Due to the length of time between purchasing land and commencing construction, Lillicrap expects that most land sales in the March quarter 2021 will be unrelated to HomeBuilder.
CoreLogic’s Head of Residential Research Tim Lawless said the surge in vacant land sales since June is a testament to the popularity of HomeBuilder.
He says the recently announced extension to timeframes for commencement of construction under the program was sensible given the surge in detached home approvals in the second half of last year and will help to ease pressures as the industry works through a substantial pipeline of projects.
Going forward, Lawless expects a softening in land demand throughout 2021 as the impact of HomeBuilder fades and higher entry costs make it difficult for new home buyers to enter the market.