Turn around in new home starts in Australia expected in early 2013
The latest residential land update report suggests that new housing starts in Australia should begin to recover modestly by early 2013.
The HIA-RP Data Residential Land Report compiled by the Housing Industry Association, the voice of Australia’s residential building industry, and RP Data, Australia’s leading property information and analytics provider, shows a significant improvement in residential land sales in the June 2012 quarter.
Land sales increased by 23.3% and are up by 29.7% compared to the same period in 2011, but HIA chief economist, Harley Dale, pointed out that the growth is from a low base and the result is exaggerated by a policy induced pull forward in land sales in New South Wales and Victoria.
‘Nevertheless, land sales did rise in all six state capitals and in a majority of regional areas and that is an encouraging result. Residential land sales signal the prospect of a turn around in new housing starts from the December 2012/March 2013 quarters, which has been HIA’s long held forecast,’ he said.
‘The recovery will be modest and the onus is on all levels of government to rectify the policy failures which considerably constrain new residential construction activity. Progress on this front is generally too slow or non-existent, yet you’d hope by now that governments are attune to the fact that interest rate cuts aren’t as effective as they were and it is government action that needs to be the leader not the follower,’ he added.
According to RP Data’s research director Tim Lawless, the improvements in vacant land markets have been consistent enough to call it a trend, however it will be important to see how changes in state government policy flow through to the market over coming quarters.
‘These results represent the third consecutive quarter where land sales have shown an improvement and this further highlights that consumer sentiment towards housing is improving,’ said Lawless.
There were 15,255 vacant land sales over the June quarter this year, the highest number of sales recorded since the June quarter of 2010. Despite the uplift, land sales remained around 16% below the decade average, highlighting that the improved conditions are coming from a low position.
While the number of land sales has increased across every state capital over the June quarter, the significant rise recorded in June can largely be attributed to an increase in activity across New South Wales where land sales were up 51% and in Victoria which recorded a 47% surge in sales.
‘Changes in state government policies have clearly drawn buyer demand forward, confirming just how sensitive the market can be to government intervention. It will be interesting to see if the improved market conditions can be sustained over the September quarter, where after that time, some of the concessions will no longer be available,’ Lawless explained.
In the June 2012 quarter the weighted median residential land value in Australia eased by 0.3% to $192,828, some 1.7% higher when compared to the same period in 2011.
The median value for capital cities eased by 0.6% in the June 2012 quarter to $218,197, some 3.1% higher than in the June 2011 quarter.
The median value for Regional Australia was $154,080, just 0.1% up over the June 2012 quarter, and a 1.3% reduction compared with the same period in 2011.