In an increasingly positive sign for the housing construction industry in Australia, sales of vacant residential land have hit three year highs as a 33 per cent surge in Sydney has led to an eleven-year high in the nation’s largest city.
Published by the Housing Industry Association and property information services provider RP Data, the latest HIA-RP Data Residential Land Report indicates that the seasonally adjusted volume of sales of vacant residential lots throughout Australia surged 18.2 per cent in the June quarter to come in at 17,170 – the highest level on record since the March quarter of 2010.
The figures are a further sign of strength in the detached segment of the housing construction market which, despite having ceded market share to the multi-residential sector over the past decade, has made a modest comeback in the past 12 months.
Meanwhile, following a flat June quarter in which median lot prices rose just 0.2 per cent across the six state capitals to reach $219,863 and contracted one per cent in regional Australia ($153,710), the average cost of purchasing vacant land has risen just one per cent across the nation over the past year – meaning that for now at least, any upward cost pressures associated with the land component of housing construction costs remain in check.
RP Data research director Tim Lawless says the latest increase is being driven by an undersupply of housing in Sydney along with improving sales activity in Melbourne, Brisbane and Adelaide.
Sales volumes in Sydney hit 11-year highs in the June quarter and are 33 per cent above the levels recorded during the previous corresponding quarter one year earlier.
Still, Lawless noted that volumes of lots sold remains below the most recent peak at the height of post-GFC stimulus efforts.
“The improved number of land sales reflects a higher level of buyer demand, but we need to keep in mind that the figures are moving higher from a low base and we are continuing to record a substantially lower number of land sales than what was recorded during the last growth phase back in 2009/10,” he said.
Housing Industry Association chief economist Harley Dale welcomed the latest results but cautioned that with 56,782 lots sold over the past financial year, sales volumes remain 21 per cent below long-term historic averages. Dale has renewed calls for further policy action to free up ‘shovel ready’ available land.
“Land sales volumes highlight the prospect of further growth in detached house starts in 2013/14 following a modest lift of 3.7 per cent in 2012/13,” he said. “That would be a very positive outcome for both the new home sector and the wider economy.”
In terms of regions, Richmond-Tweed in New South Wales remains the most expensive place around the country in which to buy vacant land with a median lot price of $241,500. This is closely followed by the Sunshine Coast and the Gold Coast.
With a median value of just $55,000, meanwhile, North Western New South Wales came in as the nation’s least expensive area in which to buy a block of land.