The West Australian
Jobs growth will be the single biggest driver of land sales, but an increase takes two years to boost sales, according to a leading property analyst.
Speaking at an Urban Development Institute of Australia function, Research4 analyst Colin Keane said land sales were no longer driven by affordability, because land is cheap, and were no longer affected by iron ore prices, which have risen beyond pre-boom levels and are not expected to return to boom-time heights.
He said sales were affected primarily by jobs growth, with every 100 extra positions traditionally resulting in 42 new land sales.
He forecast land sales growing by an extra 500 annually for the next two years amid jobs growth. But there was traditionally a two-year lag between jobs growth and the subsequent boost to land sales.
Mr Keane said the land market was not currently in a downturn, but had simply returned to pre-boom levels.
Before the boom, 475 blocks of land sold in the metropolitan area every month, which jumped to 943 per month during the boom, and is now at 473 sales monthly.
“The market is doing what it should be doing,” he said.
However, the drag on prices was due to extra capacity created in the boom, resulting in lots of competition.
This had boosted the number of active residential estates, from 55 in 2008 to 204 estates now.
About 76 per cent of developers were offering incentives — worth an average $12,500 — but he said this was unnecessary, because land was already $5000 undervalued and affordability was not the barrier.
“If one block of land is actually needed in Perth, there is a capacity to produce six — and this needs to come down to two to one,” he said.
This had been good for customers. Perth’s current median lot price is $218,000; $182,000 less than Sydney, $119,000 below Melbourne and $60,000 cheaper than southeast Queensland.