The volume of residential land sales increased 18.2 per cent in the June 2013 quarter, according to the latest HIA-RP Data Residential Land Report.
HIA chief economist Dr Harley Dale said the strong growth points to further upward momentum in detached housing construction in 2013/2014.
There is a close (lagged) relationship between RP Data-HIA land sales and the number of detached house starts,” said Dr Dale.
“Land sales volumes highlight the prospect of further growth in detached house starts in 2013/2014, following a modest lift of 3.7 per cent in 2012/2013. That would be a very positive outcome for both the new home sector and the wider economy,” he said.
Dr Dale warned the 18.2 per cent increase in residential land sales was from a very low base and said it was important this growth continued for some time.
“For that to occur, there needs to be a keener policy focus on ensuring adequate and affordable shovel-ready land is available,” he said.
Tim Lawless, RP Data’s research director, said the overall growth reflects a higher level of buyer demand, indicating appropriate policy settings are currently in place.
“Policy makers such as the RBA should see the stronger housing market conditions as reinforcement of the current policy settings; not just low interest rates but also the incentives available to purchase or build a new home rather than an established one,” he said.
Mr Lawless said the improved vacant land market conditions are in line with the improvements across the broader housing market.
“The housing market has been back in growth since mid-2012, with both the rate of capital gains and transaction volumes gathering some momentum during 2013,” he said.
“It should come as no surprise that the Sydney housing market, which remains well undersupplied relative to the rate of population growth and is recording the highest rate of capital gain currently, is one of the primary drivers behind the lift in national vacant land sales.”
According to the report, the number of land sales across Sydney was 33 per cent higher over the year to the June quarter, reaching an 11-year high.