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Real estate agents eyeing their next pocket of growth should take note of recent data released about residential land demand across Australia.
The March 2019 edition of the HIA-CoreLogic Residential Land Report provides updated activity in 47 markets across Australia, including the six state capital cities.
HIA chief economist Tim Reardon explained there has been a fall in sales, against a backdrop of weaker economic conditions.
“This fall in sales can be attributed to the decline in demand for new homes. This reflects the downturn in the market during 2018 and 2019,” he said.
“Residential lot sales across Australia fell in the first three months of this year to set a new record low for land sales.”
The silver lining for agents
However, Mr Reardon was quick to identify that contracted supply and access to suitable residential land was a key driver of the preceding boom period.
“A shortage of land is one of the factors that have driven home prices to increase over the past decade. An adequate supply of land is required to avoid a deterioration in affordability,” Mr Reardon added.
The bigger picture
Land supply, however, does not function in isolation, with CoreLogic’s research director, Tim Lawless, stressing the need for improved town planning and strategic infrastructure connectivity as key supporting factors for driving residential land demand.
“The consistent trend towards fewer vacant land sales, at a time when population growth remains strong, highlights the need for improved town planning policies and land release strategies that run parallel with a strategic infrastructure plan,” Mr Lawless said.
“Well-located developable land remains in short supply which has pushed the price of vacant land higher over the long term, adding to affordability challenges and a reduction in lot sizes.”
Mr Lawless also highlighted the easing of lending requirements and increased access to credit as promising signs of a bounce back for the residential land market, citing growing demand as a major factor contributing to increased prices in the second half of 2019.
“CoreLogic data to June reported a subtle monthly rise in housing values across Sydney and Melbourne. With interest rates potentially heading even lower and housing demand via population growth remaining high, we could potentially start to see some upwards pressure on vacant land prices over the second half of 2019,” Mr Lawless concluded.
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