Any recovery in new home building will fall short of policy makers’ expectations and the requirements of the Australian population, according to recent research.
The HIA-RP Data Residential Land Report provided by the Housing Industry Association (HIA) indicates there will be only a gradual recovery in residential land sales.
“There was a 13.6 per cent lift in residential land sales in the December 2012 quarter and that’s an encouraging result in its own right, following as it does a near 20 per cent drop in the September quarter,” HIA chief economist Harley Dale said.
“However, the overall trajectory for land sales is inconsistent with a strong, broad-based recovery in new residential construction in 2013.
“The findings of the latest land report are consistent with HIA’s forecast for a recovery in new residential construction in New South Wales and Western Australia in 2013, but modest to no positive action elsewhere.
“Furthermore, evidence of emerging land price pressures in Sydney and Perth highlight the importance of ensuring both a timely flow of readily available land and the pursuit of other policy reforms to reduce the excessive cost component to land supply.”
Mr Dale said there has recently been a further tightening in credit conditions for residential development. At the same time, the excessive and inefficient taxes levied on new housing, much of which is embedded in serviceable land costs, is continuing largely unabated.
“Given this dynamic is hindering Australia’s economic performance as well as prolonging considerable pain within the industry, one would hope it is a prominent focus for policy makers across all levels of government,” he said.
According to RP Data’s research director Tim Lawless, the increase in land sales over the final quarter of 2012 is an encouraging sign; however, we are yet to see a trend of consistent recovery emerge in the number of land sales.
“The lift in land sales over the December 2012 quarter hasn’t quite recovered the fall away in sales recorded over the previous quarter and, overall, the number of land sales remains well below average. That is particularly the case for vacant land markets outside of New South Wales and Western Australia where the number of sales remained subdued over the December quarter,” he said.