The latest HIA-CoreLogic RP Data Residential Land Report provided by the Housing Industry Association and CoreLogic RP Data, signals a growing divide between demand and available supply in vacant residential land.
“The number of residential land sales fell by 11.8 per cent over the year to the December 2014 quarter,” said HIA Chief Economist, Harley Dale. “In contrast, the weighted median residential land value increased by 2.8 per cent in the December 2014 quarter to be up by 6.3 per cent over the year.
“The increase in the weighted median value was driven primarily by Sydney, with significant growth also evident for Perth and Melbourne. As with all aspects of this housing cycle, there are wide divergences in land market conditions around the country – this is clearly evident across the six capital cities and 41 regional areas covered in the Residential Land Report.”
“There is insufficient shovel-ready land in some markets and this is placing undue upward pressure on residential land values. Construction of detached houses looks to be peaking for the cycle, but there is unrealised demand out there because of that lack of readily available and affordable land,” said Harley Dale.
“The price of residential land per square metre increased in Sydney, Melbourne and Perth in the December 2014 quarter, with Sydney remaining the country’s most expensive land market by some margin,” Harley Dale said. “Across regional Australia, the most expensive residential land markets are the Gold Coast and the Sunshine Coast in Queensland, and the Richmond-Tweed region in New South Wales. The least expensive markets can be found in the South East region of South Australia, and the Mersey-Lyell and Southern regions of Tasmania.”
According to CoreLogic RP Data research director, Tim Lawless, the number of vacant residential land sales has been trending lower since mid-2013 and concurrently, median land prices have been rising to new record highs.
“The opposing trends are a clear sign that demand is outweighing supply which is pushing land prices higher. Higher land prices ultimately lead to less affordable homes - it is the high cost of vacant land which significantly contributes to the increasing cost of housing. Ideally we should be seeing more land brought to the market and sold during this period of low borrowing costs.”