The latest edition of the HIA-CoreLogic RP Data Residential Land Report covers the December 2015 quarter and provide more evidence of severe supply constraints in the market for residential land.
During the December 2015 quarter, the number of residential lot sales across Australia fell by 1.6 per cent, while the median lot prices increasing by 5.2 per cent to $234,600. Land supply pressures were more pronounced in the capital cities, with lot sales falling by 2.3 per cent during the quarter and the median lot price rising by some 6.6 per cent.
“Conditions in the residential land market are making it more and more difficult to deliver the new housing stock that Australia needs,” noted HIA Senior Economist, Shane Garrett.
“Once again, we’ve had another quarter of dwindling land lot sales and pretty stiff price increases – evidence of insufficient supply,” Shane Garrett explained.
“We need much greater emphasis on the delivery of new residential land supply involving better models for infrastructure delivery and a real sense of urgency in the planning process,” Shane Garrett pointed out.
“Housing costs are one of the biggest components of most households’ budgets and needlessly jacking land prices up through inaction on supply will make for real hardship over the long term,” concluded Shane Garrett.
According to CoreLogic RP Data research director Tim Lawless, the number of vacant land sales has dived by 14 per cent over the 2015 calendar year. “While the fall in vacant land transactions is substantial at a national level, the drop has been more severe across the capital cities where housing demand is the highest. Land sales were down 19 per cent compared to the same quarter a year ago across the combined capitals.”
“If the drop in land transactions was attributable to lower demand we would expect a commensurate fall in selling price. In fact the opposite is true; land prices are rising in the context of lower sales which suggests a supply shortage is at play.”
“The ongoing challenge for state governments is to ensure a sufficient release of residential land that is located in desirable locations and well connected by transport infrastructure to major working centres and necessary amenities like schools, health care and retail precincts,” added Mr Lawless.
During the December 2015 quarter, vacant residential land sales are estimated to have declined in Sydney (-22.3 per cent), Brisbane (-20.1 per cent) and Perth (-7.2 per cent). Elsewhere, the level of sales increased during the quarter: Melbourne (+13.2 per cent); Adelaide (+27.5 per cent); and Hobart (+7.2 per cent).