Land Prices Rise Amid Low Supply

Posted on 26/10/2016  
Land Prices Rise Amid Low Supply

The average price for residential land has hit an all-time high, according to the HIA-CoreLogic Residential Land Report for the June 2016 quarter. HIA Senior Economist Shane Garrett attributes this to strong demand and low supply.

The Residential Land Report provides a comprehensive review of quarterly sales activity and price trends in 41 regional and six capital city markets across Australia. That data reveals that while vacant land prices are rising, the number of vacant lots for sale is falling.

During the June Quarter, the median residential land price rose 2.6% to $237,535, based on 18,395 residential lot transactions, which were down by 9.3% on a year ago.

Increases in land sales were experienced in some regional areas, but the greatest upswing occurred in Hobart. There, sales numbers rose 27% over the first half of 2016, compared with the same period a year ago.

Land turnover was unchanged in Adelaide, while reductions in sales numbers were recorded in Sydney, Melbourne, Brisbane and Perth. The number of land sales across Sydney fell 38% while land prices rose 14.1% over the year.

“The opposing trends of transaction numbers and prices is a clear indication of demand outweighing supply which is creating significant price inflation across vacant land markets," says CoreLogic research director Tim Lawless.

"While unit markets have seen approvals and construction activity reach spectacular highs, supply levels across the detached housing sector remains insufficient in many areas.

“The lack of available vacant land highlights that greenfield housing markets are likely to remain undersupplied which implies further upwards price pressures across the key vacant land markets where demand remains strong."

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