- 29 Aug, 2016

Modest Growth in Residential Land Prices

The latest Residential Land Report released by CoreLogic RPData and the Housing Industry Association (HIA) provides detailed information on the sales activity and prices in Australia for residential land. This information, which is for the March 2016 quarter, suggests that land prices are moderating across Australia. For home buyers, this knowledge may allow them to buy land or a house and land package for a more competitive rate, or for them to discuss their options with a mortgage broker.

The Sales Activity of Residential Land in Australia

The number of lots sold in Australia declined by 1.3% over the last 3-months. This turnover was 13.0% lower than 12-months earlier. A total of 14,916 lot sales occurred during the March quarter 9,276 sales (62.2%) took place in capital cities and 5,640 sales (37.8%) in regional markets.

Over the last two years, a steady supply of residential allotments in city areas is beginning to ease residential land price pressures. The sales of land increased by 3.4% across the six capitals – Sydney, Perth, Brisbane, Melbourne, Adelaide and Hobart but were 12.3% lower than 12-months ago.

Regional land sales fell, with sales dropping by 8.1% over the March 2016 quarter. Sales rates in country areas are also 14.0% lower than 12-months ago.

Land sales across the nation have been falling since June 2014, when turnover peaked. Compared to June 2014 sales figures, capital city sales are 29.9% lower in the March 2016 quarter. The only capital cities to experience an increase in land sales turnover were Adelaide and Hobart recording an increased turnover of 4.2% and 7.3% respectively. In the four remaining capitals analysed, turnover of land fell by as much as 53.1%; Brisbane turnover dropped by 7.7%, Melbourne decreased by 14.1%, and Perth by 14.8%, while Sydney witnessed the greatest decline at 53.1%.

The regional turnover of land is steadily decreasing since its peak in June 2014. Over the six months to March 2016, the greatest volume of land sales occurred in Northern New South Wales, the Gippsland and Central West New South Wales areas. Over the same time, the most significant declines in turnover took place in Northern South Australia, South Eastern Western Australia and the Illawarra region.

 

The Weakest Markets for Turnover

Region

Change (%)

6-Months to March 2016

Compared to 6-Months to Mar 2015

Northern South Australia -71.3%
South Eastern Western Australia -61.1%
Illawarra New South Wales -45.7%
Darling Downs Queensland -44.7%
Northern Queensland -40.6%

Source: CoreLogic RP Data and HIA Economics

 

The Strongest Markets for Turnover

Region

Change (%)

6-Months to March 2016

Compared to 6-Months to Mar 2015

Northern New South Wales 39.2%
Gippsland Victoria 37.1%
Central west New South Wales 22.5%
Gold Coast Queensland 20.9%
Southern Tasmania 20.9%

Source: CoreLogic RP Data and HIA Economics

 

Residential Land Prices in Australia

Over the March 2016 quarter, according to the CoreLogic and HIA report, the growth of land prices slowed nationally to 1.2%. However, the volume of land sales increased across Australia by 3.4% in the six capital cities analysed Sydney, Perth, Brisbane, Melbourne, Adelaide and Hobart in the Residential Land Report. The total number of transactions across regional Australia dropped by 8.1% over the same duration.

 

Median Lot Price by Region

Region March 2016 Median Price 3-Month Median Price Growth 12-Month Median Price Growth
Sydney $399,250 -1.9% 12.5%
Perth $270,000 0.4% 0.7%
Brisbane $243,000 5.5% 5.7%
Melbourne $235,000 2.2% 9.3%
Adelaide $200,000 2.6% -2.9%
Hobart $172,500 19% 15%

Source: CoreLogic RP Data and HIA Economics

Allotment prices in regional Australia rose by 1.3% in the March quarter. These prices were 2.4% greater than values recorded 12-months ago.

Market price growth eased nationally over the quarter, which economists say is a positive sign, as this allows for more development opportunities. The value of residential land, however, is at record highs, which may reduce the affordability of land for Australian families.

Are you thinking of buying a home? Then contact eChoice and find the right home loan for YOU today.


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