Land Prices

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<h3 class="post-title entry-title"><a href="https://petewargent.blogspot.com.au/2017/08/melbourne-land-sales-hit-fastest-pace"></a></h3>
<div id="post-body-3574513154739070757" class="post-body entry-content">The trend result for new motor vehicle sales rose to 101,083 in July, the highest on record.</div>
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<br><div>The recent surge has largely been accounted for by Victoria, where new units sold are +4.4 per cent higher year-on-year in seasonally adjusted terms at 28,349.</div>
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<div>Victoria is the home of arguably the most vibrant economy in the country right now: Greater Melbourne.</div>
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<div>South Australia has also been improving steadily, with seasonally adjusted new vehicle sales +8.1 per cent higher over the year at 6,269.</div>
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<div>In annualised terms, New South Wales has racked up 397,652 unit sales, which is the highest figure ever recorded for any state. </div>
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<br><div>Sports utilities continue to dominate the sector, and are all set to overtake passenger vehicles as the most popular choice over the months ahead, which has been an extraordinary progression. </div>
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<div>Meanwhile production continues to plummet as the domestic auto industry winds up, and the overwhelming bulk of new vehicles going forward will be imported. </div>
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<div><strong><span style="text-decoration: underline;">The wrap</span></strong></div>
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<div>Overall, these were more strong numbers indeed for new vehicle sales, with the Victorian economy once again shining.<br><br>This is leading in turn to a starburst of population growth and demand in Melbourne.</div>
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<div>Oliver Hume reported that the average time on market for vacant land sales in Melbourne continued a precipitous drop from 200 days in Q4 2012 to a fresh all-time low of just 30 days in Q2 2017. </div>
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<div>Blocks have never been snapped up at anything like this speed before across the history of the data series. </div>
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<div>Demand has been strong locally, with anecdotally even some Sydneysiders now relocating to Melbourne for cheaper housing. </div>
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<div>The median price of land in Metropolitan Melbourne increased by +2.3 per cent in the quarter to $268,000 according to Oliver Hume, with the average lot size declining.</div>
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<div>Land prices per square metre increased by $14 to $654. </div>
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<p class="p1"><span class="s1">PETE WARGENT is the co-founder of <a href="https://allenwargent.com/" target="_blank"><span class="s2">AllenWargent</span></a> property buyers (London, Sydney) and a best-selling author and <a href="https://petewargent.blogspot.com/" target="_blank"><span class="s2">blogger</span></a>.</span></p>
<p class="p2"><span class="s3"><em>His latest book is </em><a href="https://www.bigskypublishing.com.au/Books/General-Interest/Four-Green-Houses--and-a-Red-Hotel/1015/productview.aspx" target="_blank"><span class="s2"><em>Four Green Houses and a Red Hotel</em></span></a><em>.</em></span></p>
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<h3 class="post-title entry-title"><a href="https://petewargent.blogspot.com.au/2017/08/melbourne-land-sales-hit-fastest-pace"></a></h3>
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Melbourne land hits fastest sales pace on record: Pete Wargent

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<p><span style="line-height: 1.3em;">At the end of 2015, the median price of vacant land across the combined capital cities was recorded at $265,000 while the median land price across the combined regional markets was $156,000. </span></p>
<p>A $109,000 (69.9%) price difference between regional and capital city prices is now the largest differential on record for both.</p>
<p>It also goes some way to explaining the differences in the cost of built form (houses or units) in the capital cities relative to non-capital city areas. Over the past year, capital city vacant land prices have increased by 4.0% compared to a -5.2% fall in prices in regional areas.</p>
<p>At the end of 2015, the median lot size for capital city vacant land was 466 sqm having increased by 3.6% over the year. Across regional markets the median land size was a much larger 809 sqm having increased by 8.3% over the past year. </p>
<p>Land sizes have fallen over time in capital city and regional markets however, lot size compression has been much greater in capital cities. To put this in perspective, median lot sizes have fallen at a rate of - 2.5% annually in capital cities over the past decade compared to falls of -0.5% per annum in regional markets. </p>
<p>Across the combined capital cities the median rate/sqm for vacant land was recorded at $552 at the end of last year. At the same time the rate was a substantially lower $179/sqm in regional markets. Capital city rates/sqm has fallen by -2.5% over the past year while in regional markets they are -12.4% lower.</p>
<p>The fall in capital city rates/sqm is due to the increase in land sizes while in regional markets it is due to both prices falling and land sizes increasing over the past year.</p>
<p><a href="/images/2016/03/10/Screen%20Shot%202016-03-10%20at%2012.41.40%20PM.png" target="_blank">Click to enlarge</a></p>
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<p>As can be seen in the tables outlining the key vacant land statistics across each of the state capital cities, Sydney’s median land price ($410,000) is substantially higher than the other capital cities. Compared with the second most expensive city, Perth, at $299,000, Sydney’s median land price is more than $100,000 higher. The two cities which have seen the highest rates of housing value growth in recent years, Sydney and Melbourne, have also recorded an exceptional increase in median land prices over the past year at 20.2% and 23.5% respectively. Although Sydney is the most expensive on a rate per square metre basis, vacant land in Perth is the nation’s most expensive by virtue of the fact that only Adelaide has smaller lot sizes. </p>
<p>Today’s data provides valuable insights into the reasons why housing costs in the capital cities is so high. In a market like Sydney for example, if the typical land costs $410,000 it is difficult to imagine being able to buy the land and build a home for less than $550,000. </p>
<p>With housing affordability now back on the national political agenda it is likely we will see renewed focus on the high cost of developable land in our capital cities. Reforms to reduce the cost of the vacant land would go a long way to improving housing affordability, particularly for new homes. Of course the other alternative is to encourage greater economic development of regional areas where the cost of housing is significantly lower than it is in the capital cities.</p>
<p><a href="/images/2016/03/10/Screen%20Shot%202016-03-10%20at%2012.43.35%20PM.png" target="_blank">Click to enlarge</a></p>
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<p><em>Cameron Kusher is research analyst for CoreLogic RP Data. You can contact him <a href="https://blog.corelogic.com.au/about/">here</a>.</em></p>
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Land prices on the increase: Cameron Kusher

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<p>The median lot value in Australia rose by another 3.3 percent in the September 2016 quarter.</p>
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<div>The Housing Industry Association (HIA) reported that the median lot value hit at a record high of $243,585. </div>
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<div>Since June 2012, the median lot value has increase by 28 percent or nearly $54,000.<br><br>
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<div><a href="https://www.propertyobserver.com.au/images/2017/02/16/HIA.jpg" target="_blank">Click to enlarge </a></div>
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<div class="separator">Source: (HIA)</div>
<br><div>The picture around the country was mixed.</div>
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<div>Land values in the Kimberley have well and truly crashed by 74 percent from the prior comparative period, for example.</div>
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<div>At the other end of the scale Sydney's <strong><em>median</em></strong> lot value is not approaching $1,000 per square metre. </div>
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<div>Perhaps this is not all that surprising given that volumes were down by nearly 30 percent in Sydney year-on-year, with a dearth of shovel-ready land being made available. </div>
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<div>The next most expensive city for vacant land prices is Perth at $701/sqm.</div>
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<div>The volume of lot sales increased to 1,121 in the quarter, following some low volumes in previous quarters. </div>
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<div>Indeed, volumes were still some 7 percent below their 2015 peak, according to the HIA. </div>
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<div>Overall, capital city land sales rose by about 10 per cent in the year to September 2016, reflecting higher demand and generally stronger economic conditions, while volumes across regional Australia posted a gain of just 1.1 percent. </div>
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<em>PETE WARGENT is the co-founder of </em><a href="https://allenwargent.com/"><span class="s2"><em>AllenWargent</em></span></a><em> property buyers (London, Sydney) and a best-selling author and </em><a href="https://petewargent.blogspot.com/"><span class="s2"><em>blogger</em></span></a><em>. </em>
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Where the capital city land prices are rising the most: Pete Wargent

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<p class="post-title entry-title">EXPERT OBSERVER</p>
<div>Property transaction volumes have been crippled in recent months.</div>
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<div>But one key dynamic has not changed.</div>
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<div>The capital cities continue to create hundreds of thousands of the most favourable employment opportunities...and there still ain't any more well-located land.</div>
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<div>Capital city vacant land prices increased by a massive 16 per cent to a record high of $336,124 over the year to June 2018, as supply fails dismally to keep pace with demand. </div>
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<div>This was much faster than the 5 per cent increase for regional lot values. </div>
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<div>Sydney may still have the highest land price at $477,250 at the end of the June quarter.</div>
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<div>But Melbourne recorded faster growth, with the median land price per square metre exploding another 27 per cent higher higher over FY2018. </div>
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<div>Sydney's median vacant land price per square metre is now $1,100, ahead of Melbourne at $885.</div>
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<div>Price pressures are still strong in the residential land market, according to HIA.</div>
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<div>They found that the price and number of vacant residential lots sold increased across the state capital cities in the June 2018 quarter.</div>
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<div>The weighted median residential lot price for Australia's state capitals increased by 3.8% to $336,125 in the June 2018 quarter to be 15.5% higher over the year.</div>
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<div>Melbourne saw the strongest price surge with vacant residential land in Melbourne jumping 26.5% over the year to the June 2018 quarter.</div>
<p class="post-body entry-content">Tim Lawless CoreLogic' Research Director agreed with this sentiment stating upwards pressure on capital city land values will continue. </p>
<div>He found construction costs are also rising faster than inflation.</div>
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<div>And accordingly, the future price of new detached housing will be "inevitably higher" according to CoreLogic analysis.</div>
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Capital city land price boom continues: Pete Wargent

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<div>The Housing Industry Association (HIA) released its Land Report for the December 2015 quarter, which showed that land prices continued to soar through 2015. </div>
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<div>The median lot price in Australia ripped +5.2 percent higher in the three months to December alone to $234,600. </div>
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<div>Over the last half decade median lot values have increased by about +22 percent, while lot sizes have also been shrinking, meaning that land prices per square metre have been increasing sharply. </div>
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<div>This has not been regional Australia phenomenon through this cycle, with price rises driven overwhelmingly by the capital cities (although Adelaide's lot prices actually decreased in the year to September 2015). </div>
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<div>The same dynamic was in evidence this quarter, with capital city land prices screaming another +6.6 percent higher in just three months, while the number of transactions tightened again by a further -2.3 percent. </div>
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<div>That said, there are two "regional" locations which have experienced solid population and employment growth, and now have elevated and rising land prices, being the Sunshine Coast ($272,000) and the Gold Coast ($230,500). </div>
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<div>The coastal areas of south-eastern Queensland are enjoying the lower dollar and increasing tourism, particularly from China as far as I can tell.  </div>
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<div>As you can see in the chart above, it's clear that supply isn't keeping pace with demand, with the number of lot sales actually declining by -1.6 percent in the December quarter. </div>
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<div>Transaction levels have been fading for nearly two years now despite rampant demand.</div>
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<div>Indeed vacant residential land sales crashed lower in Sydney (-22.3 percent) and Brisbane (-20.1 percent) on supply restrictions in the quarter, although there were increased sales volumes in some other capital cities. </div>
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<div>Through the course of 2015 vacant land sales dived by 14 percent, and by a staggering 19 percent in the capital cities, where demand is actually higher. </div>
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<div>The HIA noted that the dynamic of falling sales and rapidly rising prices points to supply bottlenecks.</div>
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<p><span><em>PETE WARGENT is the co-founder of <a href="https://allenwargent.com/" target="_blank" rel="nofollow">AllenWargent</a> property buyers (London, Sydney) and a best-selling author and <a href="https://petewargent.blogspot.com/" target="_blank" rel="nofollow">blogger</a>.</em><br></span></p>
<p><em>His latest book is <a href="https://www.bigskypublishing.com.au/Books/General-Interest/Four-Green-Houses--and-a-Red-Hotel/1015/productview.aspx" target="_blank" rel="nofollow">Four Green Houses and a Red Hotel</a>.</em></p>
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