HIA: Sydney and Perth land prices move to record highs

Land sales increase +4.3%

Residential land sales increased by 4.3% in the March quarter, suggesting that the steady uptrend in dwelling construction may continue.

Signals were strongest in Sydney and Perth reports the Housing Industry Association (HIA):

“From a very low base in 2011, residential land sales have displayed only modest upward momentum, a trend  reinforced by the 4.3 per cent increase observable for the March 2013 quarter,” said HIA Chief Economist, Harley Dale. 

“The March quarter update signals we are moving in the right direction, but as a key leading 
indicator land sales suggest the magnitude of a first stage new home building recovery will fall short of what  the economy requires.”

“At this juncture, any clear improving trends are limited to New South Wales and Western Australia,” said Harley Dale. “WA is the only state to have achieved clear and consistent improvements in residental land sales over the past 18 months.”

However, land sales have some way to increase yet in order to indicate a return to the levels of dwelling construction hoped for, while the price of land continues to increase:

Source: HIA

Land prices to record highs

Two city property markets have gathered momentum: Sydney and Perth:

“Land prices, however, continue to find record highs. Sydney and Perth are the country’s two most expensive land markets and by quite a margin,” said Harley Dale. “’It’s no coincidence that they are the two most highly taxed residential new home building markets in the country, due in large part to excessive taxes and charges related to land.”

“The increase in land sales is in line with the improving trend in sales across the detached house and unit markets throughout the second half of 2012 and early 2013. Lower interest rates are clearly encouraging broadly improving housing market conditions and hopefully this recent momentum can continue, especially with first home buyer incentives now being directed specifically at new construction across a number of  states.”

City versus regional

Capital city land prices (+3.2%) increased at a faster rate than regional land prices (+0.7%) reflecting greater demand and restrictions on supply.

In the March 2013 quarter the weighted median residential land value in Australia increased by 2.5 per cent to $198,152. This value was 2.4 per cent higher when compared to the same period in 2012. The median value for capital cities increased by 3.2 per cent in the March 2013 quarter to $225,781, 2.9 per cent higher than in the March 2012 quarter. The median value for Regional Australia was $155,807 in the March 2013 quarter. 

This represents a quarterly increase of 0.7 per cent and a 1.3 per cent increase compared with the same period in 2012."

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