The price of land for new residential building has continued to rise despite a fall in demand, predominantly in the higher-profile Sydney and Melbourne markets, according to the March 2019 edition of the HIA-CoreLogic Residential Land Report.
The report provides updated activity in 47 markets across Australia, including the six state capital cities.
“In the September 2018 quarter, land lot prices across Australia rose by 0.8 [of a percentage point] to reach $279,949,” said HIA chief economist Tim Reardon.
He said that, over the same period, the number of residential land lots sold has fallen by 16.2 per cent.
“After five years of exceptionally strong sales activity, a credit squeeze and a loss of market confidence led to a rapid fall in new home sales and approvals,” Mr Reardon said.
“This slowdown is evident in land sales and, unfortunately, the fall in demand has not yet resulted in a fall in price. The impact of the fall in demand for new homes and the rise in land prices places additional pressures on the new home market and could further impede activity in the home building market.”
CoreLogic research director Tim Lawless said that the Sydney and Melbourne markets are the most effected.
“The reduction in settled land sales is most evident across the Sydney and Melbourne markets where broader housing market conditions have been weakening since mid to late 2017.
“Despite the substantial drop in activity, land prices are falling at a much slower rate than housing prices in Sydney, while Melbourne land prices on a rate per square metre basis are substantially higher than a year ago compared with a 9.1 per cent drop in dwelling values over the past year.
“The resilience of land prices relative to the wider market likely reflects the scarcity value of well-located vacant land in these cities.”