Land Supply Constraints Continue to Impact Housing Market 1

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Friday, February 19th, 2016
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During the September 2015 quarter, the number of residential lot sales fell by 2.7 per cent while median lot prices rose by 4.2 per cent.

The tightening of market conditions was concentrated in the capital cities, where prices increased by 5.4 per cent but the number of lots transacted actually fell by 4.5 per cent.

“Australia’s population has broke the 24 million barrier for the first time,” remarked HIA Senior Economist, Shane Garrett. “Today’s report provides a sobering indictment of how land supply policy is not keeping pace with the housing needs of our growing population,” Shane Garrett added.

“The combination of strong land price growth yet declining transaction volumes are hallmarks of a market constrained by supply bottlenecks,” Shane Garrett pointed out.

“Ineffective land supply policy will limit Australia’s long term growth potential and erode competitiveness by forcing costs up,” warned Shane Garrett.

“The key supply side issues like planning delays, efficient infrastructure provision and the mammoth taxation burden on new housing need urgent attention. Otherwise, living standards for Australia’s 24 million residents will never reach their full potential,” concluded Shane Garrett.

According to CoreLogic RP Data research director Tim Lawless, the number of vacant land sales has been trending lower since reaching a recent peak over the June quarter of 2014, with the median land price continuing to push higher despite lower volumes. “Buyer demand across the vacant land market has remained strong, which is why prices are rising on lower sales, however, as land prices rise it is likely block sizes will have to reduce in order to maintain an affordable price point for buyers.”

“Median lot prices have risen across every capital city over the past twelve months except for Adelaide (-1.0%). The tight supply of land across Sydney has seen median land prices rise by the most of any capital city over the past year, up 22.8 per cent compared with a weighted average across the capitals of 10.7 per cent growth.”

“Despite having the most expensive housing and vacant land, Sydney is currently showing the second largest median lot size amongst the capital cities at 537 square metres. Somewhat counterintuitively, the median land area has historically been the smallest in Adelaide, with the September quarter data showing a median lot size of just 375 square metres,” Mr Lawless said.land-supply

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  1. Brian Thian

    As I see it, the biggest problem is the urban land in the suburbs being locked up by backward thinking Councils and planning laws..We should be much more liberal in allowing high density developements and living, learn from and catch up with the rest of the world.