Land prices in Sydney have seen an unprecedented surge as demand associated with massive growth in housing activity outstrips the pace at which new land is being made available for use, two separate reports say.
In its 2016 State of the Land report, the Urban Development Institute of Australia says median lot prices for vacant land in Australia biggest city jumped almost 30 percent throughout 2015 from $339,750 to $440,725.
Meanwhile, a separate report from real-estate information services provider CoreLogic says median prices throughout Sydney rose 20.2 percent to $410,000 (the difference between figures in the two reports obviously reflecting differences in measurement factors such as localities included and methodologies used) – making land prices in and around Sydney the most expensive city out of any in Australia in which to buy land.
Amid a growing shortage of land, the state government in New South Wales is working to free up areas of new supply.
Despite having eased back last year, the pace at which new land is being released in Sydney and surrounds has more than doubled over the past five years, and the government late last year announced its intention to investigate the possibility of developing up to 34,700 lots within the Greater Macarthur Region by 2036 – the first major land release in Sydney for more than a decade.
Still, at 8,1,74, the current level of new land releases throughout the city’s metropolitan area is almost 1,800 lots behind the 9,960 per annum pace the UDIA says is needed to cater for expected population growth of 80,000 per annum between now and 2031.
UDIA (New South Wales) chief executive officer Stephen Albin said the state had an overall shortage of around 90,000 homes despite the recent upturn in residential development.
He said developers were taking a ‘wait and see’ approach toward development amid expectations that home sales would ease off following a period of unprecedented strength.
CoreLogic RP Data senior research analyst Cameron Kusher said planning rules had driven a push toward high density development notwithstanding strong desires for detached housing and land on the part of many families, and that the volume of vacant land being created was insufficient as a result.
“The data would suggest that people still want a piece of land and they are willing to pay for it but there is just not enough of it,” Kusher said.
“So whilst I guess the town planning is trying to push people into higher density, it’s pretty clear that people still want vacant land and want to build their own house.”
Across Australia, CoreLogic RP Data puts overall land price growth across capital cities at 4.0 percent, with strong growth also having taken place in Melbourne (23.5 percent), Hobart (20 percent) and Perth (10.7 percent).
UDIA, however, puts price growth in Melbourne at a more modest 3.8 percent on the back of strong activity in new land releases (as mentioned above, the differences in figures no doubt represent differences in localities included and measurement methodologies used).