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Australia’s residential land market showed signs of increased supply pressures in the closing quarter of 2016, according to the latest HIA-CoreLogic Residential Land Report.
HIA senior economist Shane Garrett says the volume of residential lot transactions dipped sharply in the December 2016 quarter, placing pressure on land prices.
“With land being such a crucial ingredient in new home supply, more challenging cost conditions in the market for residential land in 2017 will make the battle to improve housing affordability more difficult,” Mr Garrett said.
He said it needs to be easier, and less costly, to deliver additional stocks of shovel-ready residential land to market.
“This can only be done by tackling planning delays in zoning and subdivision, releasing government-held land and improving funding mechanisms for housing infrastructure.”
CoreLogic commercial research analyst Eliza Owen said the continued fall of sales volumes against sustained value increases suggests demand is outstripping supply of vacant residential lots.
“This is particularly evident in Melbourne, where the value of lots experienced the highest growth of all capital cities in the year to December,” Ms Owen said.
“The median lot value in Melbourne is still lower than Sydney, which has consistently maintained the highest median lot price of the capital city markets.”
With housing affordability being high on the government’s agenda, more attention needs to be paid to how increased supply of residential land can help ease demand, Ms Owen said.
The report, by Housing Industry Association and CoreLogic, found the weighted median land lot price rose by 4.8 per cent to $254,406 in the December 2016 quarter, 9.3 per cent higher than a year earlier.
The estimated number of land lot sales across Australia totalled 10,756 in the final quarter of 2016, down by 22.7 per cent compared with the previous quarter and 39.5 per cent lower than a year earlier.
Based on land transactions during the December 2016 quarter, the annual pace of residential land price growth was strongest in Melbourne (+16.3 per cent), followed by Sydney (+10.7 per cent) and Adelaide (+10.3 per cent).
Over the same period, Perth’s residential land market experienced the weakest price growth (+0.9 per cent), with modest land price increases affecting Brisbane (+5.4 per cent) and Hobart (+3.1 per cent).
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