Sales of residential land in Australia falls as prices rise
Residential building land in Australia has increased in price but availability is falling, making it more and more difficult for builders to provide affordable housing, it is claimed.
In the last quarter of 2015 the number of residential lot sales across Australia fell by 1.6% while the median lot prices increasing by 5.2% to $234,600, according to the latest edition of the HIA-CoreLogic RP Data residential land report.
Land supply pressures were more pronounced in the capital cities, with lot sales falling by 2.3% during the quarter and the median lot price rising by some 6.6%.
A breakdown of the figures show that vacant residential land sales are estimated to have fallen in Sydney by 22.3%, in Brisbane by 20.1% and in Perth by 7.2%. Elsewhere, the level of sales increased. In Melbourne sales were up by 13.2%, in Adelaide by 27.5% and in Hobart by 7.2%.
‘Conditions in the residential land market are making it more and more difficult to deliver the new housing stock that Australia needs. Once again, we’ve had another quarter of dwindling land lot sales and pretty stiff price increases which is evidence of insufficient supply,’ said Shane Garrett, HIA senior economist.
‘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,’ he 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,’ Garrett added.
CoreLogic RP Data research director Tim Lawless, pointed out that the number of vacant land sales has fallen by 14% in 2015. ‘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% compared to the same quarter a year ago across the combined capitals,’ he said.
‘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,’ he added.
‘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,’ he concluded.