Land supply down under under pressure

Photo credit: 8LettersUK

The volume of residential land sales slipped slightly in the third quarter of 2013, the HIA report reveals. Transactions dipped 2.8 per cent to 16,638, following the previous quarter’s strong result. However, sales activity in the land market was up by almost 40 per cent compared with 12 months earlier.

With demand strong and supply low, prices are on the up. Indeed, land values rose 2.9 per cent in the third quarter of 2013.

“Supply bottlenecks appear to be affecting the residential land market, playing a role in that price pressure,” comments HIA Senior Economist, Shane Garrett.
“We have long emphasised the importance of ensuring that an adequate supply of affordable, shovel-ready land will be crucial to any sustained recovery in new home building."

“That task is imperative now more than ever. All levels of government need to implement the necessary reforms to address the problems affecting the residential land market. Reducing the excessive taxes and charges on housing as well as reducing planning and land release delays are key areas that need attention,” urges Garrett.

In the September 2013 quarter the weighted median residential land value for Australia’s six state capitals increased by 3.3 per cent to $226,448. This value represents a 3.4 per cent increase on the value in the same period in 2012. The median value for Regional Australia was $157,756 in the September 2013 quarter. This represented a quarterly rise of 2.1 per cent and an annual increase of 1.5 per cent.

“Land sales provide a good indication of detached house building further down the line,” explained Shane Garrett. “Accordingly, we see the real prospect of rising detached house building activity in 2014."