Market recovery starts to put pressure on residential land
THE latest HIA-RP Data Residential Land Report provided by the Housing Industry Association and property information analytics provider RP Data may be showing an early sign that residential land supply is coming under pressure amid the current market recovery.
The volume of residential land sales slipped slightly in the September 2013 quarter, down by 2.8 per cent to 16,638, following the previous quarter’s strong result.
However, sales activity in the land market was up by almost 40 per cent compared with 12 months earlier.
The weighted median residential land value increased by 2.9 per cent over the September quarter alone, reflecting the strong market demand conditions.
‘‘Supply bottlenecks appear to be affecting the residential land market, playing a role in that price pressure,’’ noted HIA senior economist Shane Garrett.
‘‘We have long emphasised the importance of ensuring that an adequate supply of affordable, shovelready land will be crucial to any sustained recovery in new home building,’’ commented Mr Garrett.
‘‘That task is imperative now more than ever. All levels of government need to implement the necessary reforms to address the problems affecting the residential land market. Reducing the excessive taxes and charges on housing as well as reducing planning and land release delays are key areas that need attention,’’ Mr Garrett urged.
‘‘Despite the slip in sales volumes, the September 2013 quarter still compares well with recent history,’’ continued Shane Garrett.
‘‘Land sales provide a good indication of detached house building further down the line,’’ explained Mr Garrett. ‘‘Accordingly, we see the real prospect of rising detached house building activity in 2014.’’
According to RP Data’s research director Tim Lawless, market activity has varied substantially across each capital city.
‘‘The number of residential land sales has been accelerating across Melbourne and Brisbane although volumes remain well below the recent highs recorded back in 2009. Perth, Adelaide and Hobart have all seen some slippage in land parcels sold over the September quarter.’’
Mr Lawless continued, ‘‘State gov- ernment incentives focused on stimulating the new housing sector are clearly having their effect, creating demand in a sector that provides substantial multipliers for the economy. We can expect the higher number of land sales to lead to more detached housing construction which in turn creates jobs, and leads to more spending on building materials, consumer goods, appliances and home furnishings.’’
In the September quarter the weighted median residential land value for Australia’s state capitals increased by 3.3 per cent to $226,448. This value represents a 3.4 per cent increase on the value in the same period in 2012. The median value for Regional Australia was $157,756 in the September 2013 quarter. This represented a quarterly rise of 2.1 per cent and an annual increase of 1.5 per cent.