LAND REPORT RELEASED
The vacant land market figures in UDIA’s June 2017 Quarterly Index showed a moderate increase in the average price of land in the Perth and Peel region. The average price in Perth and Peel increased by 3.7 per cent to $232,348, up from $224,033 in the March 2017 quarter.
This change indicates there has been a stabilisation in the property market, which will continue heading into the second half of the year.
The growth in land prices comes as recent figures from the Chamber of Commerce and Industry predicted a return to growth for the state’s economy in the next financial year.
What is notable in this quarter’s figures is the increase in the average price of land has occurred hand in hand with a decrease in the number of lots on the market. In fact, the number of lots on the market as at June 30, 2017 was down 9 per cent compared with 31 March, 2017 in Perth and Peel.
This is due to the level of stock on the market returning to more ‘normal’ levels, with land developers more effectively balancing supply with demand for land.
This trend is expected to continue in the coming year across the Perth and Peel region, as lot construction activity slows and the number of overall lots predicted for release over the next 12 months is projected to be down by 17.5 per cent compared with last quarter, and down 23 per cent year-on-year.
Looking at the figures in more detail, the north-east metropolitan growth corridor recorded the biggest share of sales activity for the June quarter, with 28.4 per cent of all sales. The City of Swan continued to drive this growth, with 443 lots sold for the quarter at an average price of $660/sqm.
The most affordable land can still be found in Rockingham, where lots averaged $176,974, or $506/sqm, and Serpentine-Jarrahdale, where the average price of lots was slightly higher at $192,869, but lower per square metre at $453. Rockingham recorded the highest level of sales for the quarter in the south-western corridor.
Looking forward to where the majority of lots will be released over the next 12 months, we expect it to be highest in the south-west metropolitan corridor, with 966 lots predicted for release in that area. Again, Rockingham will be home to the bulk of this activity due to price.
In the north-west metropolitan corridor, the City of Wanneroo will also see good activity levels, with 817 lots predicted for release in the next 12 months. This area incorporates the major growth hot spots of Alkimos, Eglinton and Yanchep.
While property market conditions vary slightly between the different regions, we can see the Perth and Peel land development sector has moved into recovery mode after a significant downturn. This means we will see signs of growth moving forward.
North-western corridor The average price of new land in the northwestern corridor was up 12.5 per cent for the June 2017 quarter to $251,213. Home to two significant growth areas in Wanneroo and Joondalup, the corridor recorded a 21.4 per cent share of the Perth and Peel sales.
Lots under construction in this corridor are predicted to be significantly down for the next 12 months, with a 17 per cent reduction experienced in the June quarter and a 12 per cent year-on-year reduction. This reflects a reduction in supply by land developers to suit the slower current market conditions.
Wanneroo specifically continues to perform strongly, with 924 lot sales during the quarter with an average price of $208,608. That is a 3.8 per cent lift in prices compared with the March 2017 quarter.
Turning to Joondalup, there was only a moderate number of sales this quarter. The high average price of $467,764 can be attributed to those sales occurring in the more premium coastal suburbs.
The north-western corridor is expected to benefit from infrastructure investment in the coming years to 2020, with the new rail line from Butler to Yanchep predicted for completion, with stations at Alkimos, Eglinton and Yanchep.
North-eastern corridor Home to the growth hot spot, City of Swan, the north-eastern corridor recorded the highest proportion of sales in the Perth and Peel region for the June quarter 2017, with 28.4 per cent of lots sold located in this corridor.
While the average price of lots was down this quarter by 8 per cent to $219,895, the average price per square metre was actually up by 6 per cent to $667 per square metre. This is a reflection of the decline in average lot sizes, down to 330sqm.
The decline in average lot size can be primarily attributed to a number of development projects with a broad range of lot sizes, from very compact lots through to larger blocks.
The smaller lots are bringing down the overall average.
As with some other areas, land developer’s construction activity is expected to be reduced for the next 6-12 months to bring stock levels more in line with demand.
There are 844 lots under construction for release over the next year. These are across a number of new projects, primarily in the City of Swan and likely to attract strong interest from buyers given the continued demand for land in this corridor.
Northern corridor Local authority Change in lot sales Average price Average size (sqm) Share of Supply comment City of Wanneroo over quarter metro sales -16.5% $228,558 385 Strong $467,764 491 19.4% Stable City of Joondalup 78.9% $217,720 330 2.0% Tight 26.4% City of Swan 26.6%
South-western corridor The south-western corridor performed well in the June 2017 quarter, with the average price of land in the corridor increasing 11 per cent to $237,133, and 3 per cent year-on-year.
Despite a slight decline in the number of lot sales, the corridor recorded 27 per cent of all sales in the Perth and Peel area. This is the second highest share of sales behind the north-east corridor.
The south-western corridor primarily consists of three local government areas including Rockingham, Kwinana and Cockburn.
The average price of lots in Kwinana was $240,433, an increase of 18.5 per cent on the last quarter. Land in the City of Cockburn also experienced significant growth, with the average price jumping 30 per cent for the quarter to $329,994. The higher prices in Cockburn can be attributed to the mix of development types, including some boutique-style developments.
Overall, the south-western metropolitan corridor currently offers a number of strong value-formoney opportunities within a high-growth area well serviced by rail and freeway transportation.
With major redevelopments occurring along the coast and development continuing along the freeway, there is much to look forward to in this area over the coming years.
South-eastern corridor Recording a 16 per cent share of all sales in Perth and Peel, the south-eastern corridor activity was driven by sales in the Armadale and Serpentine-Jarrahdale local government areas.
While the quarterly figures might show the area has experienced a moderate decline in growth, the year-on-year figures represent longer term positive activity. For example, while the number of sales were down in the June 2017 quarter by 16 per cent, sales over the year were up a solid 11 per cent.
The average price of lots sold in the area was also down a moderate 1.6 per cent to $226,191, however this value was up year-on-year by 5 per cent.
Drilling down to specific local areas, the City of Armadale recorded an average price of $229,371, down 3 per cent on last quarter, while Serpentine-Jarrahdale remained one of the most affordable locations in Perth, with prices remaining stable at $192,869.
In terms of construction activity for the coming year, Armadale is home to the bulk of new land to be released, with approximately 690 lots under construction for release in the next 12 months. These lots will be an average size of 366sqm.