Quarterly residential land sales were up 8.4% over the June quarter, signalling a healthy year for much-needed new housing construction. The latest HIA-RP Data Residential Land Report revealed that land sales were at reasonably elevated levels throughout 2013/14, growing by a total of 10% over the financial year.
HIA Chief Economist Harley Dale said the growth is becoming broader across the nation, with land sales up in both regional and city areas.
“Both capital city and regional land markets experienced higher turnover during the June 2014 quarter. Growth was stronger in the aggregate regional land markets – up 13% compared to a 5.5% lift for Australia’s six state capitals,” he said.
“Consistent with signals from other housing indicators, the geographical recovery in residential land sales is broadening. That is an encouraging sign for detached and semi-detached dwelling construction in 2014/15.”
However, over the June quarter, the weighted median price of residential land increased by 1.1% to $205,330 – which marks the third time the value has exceeded the $200,000 threshold. Dale said land price increases must slow to maintain a healthy housing recovery.
“Over the longer time frame of the past fifteen years there has been a substantial increase in residential land values, which cannot be repeated if the nation is to succeed in adequately housing its growing and ageing population. Land supply remains a policy area that requires much greater focus, and not just at a state level.”
According to the report, capital city land prices were up 7.4% from June last year while regional city land prices increased by 4.1% over the year.
According to RP Data research director Tim Lawless, the bounce back after a softer March quarter result suggests there may still be some life left in the residential land sector.
“This is the strongest result since the June quarter of 2013 which is welcome news. A rise in land sales implies a rise in detached housing construction about six months down the track which in turn provides a substantial multiplier for the Australian economy; more jobs, more building materials, home furnishings, appliances and white good sales.”
Whether this sudden rush to buy land is indicative of a trend is yet to be seen, says Lawless.