LAND DEVELOPERS BROUGHT FORWARD NEW LAND RELEASES IN THE MARCH QUARTER TO HELP MEET INCREASING DEMAND FOR NEW DWELLINGS IN PERTH THAT HAS SEEN SALES VOLUMES REACH THEIR HIGHEST LEVEL SINCE 2006
Research by the Urban Development Institute of Australia (WA Division) showed that for the sixth consecutive quarter land developers have increased the number of lots brought onto the market, bringing an average of over 200 lots onto the market in Perth each week during the March quarter.
UDIA WA CEO Debra Goostrey said whilst many of these land releases brought forward are being snapped up quickly by purchasers eager to take advantage of near-record low mortgage rates, supply is keeping up with demand for the moment.
“We have seen the market balance change dramatically over the last 18 months, encouraged by aggressive rate cuts by the Reserve Bank and a sustained shortage of rental properties driving more people into home ownership.”
“Increased demand for new dwellings in Perth has also coincided with record population growth in WA.”
Ms Goostrey said that developers in Perth sold an average of 225 lots per week during the March quarter, which represents a 15.4 per cent increase on the December quarter.
“Despite land developers bringing onto the market lots at their faster rate in seven years, demand is outstripping supply in Perth,” said Ms Goostrey.
“Since September 2011, land sales have more than doubled and the number of lots on the market in Perth has declined 41 per cent from 2011 highs.”
Figure 1 – Residential Land availability, Perth (inc. Peel), quarterly (source: UDIA WA)
Ms Goostrey said that while there is still significantly more land available than during the peak of the boom, the development industry is facing significant hurdles and there is the possibility Perth will face land shortages within the next twelve months unless we get a system wide response.
“So far industry has been able to generally respond to increasing demand but this has been achieved by bringing forward planned stages,” said Ms Goostrey.
Ms Goostrey said that UDIA is working with a whole range of government agencies to prevent a return to severe land shortages.
“We had a destabilising overshooting of land prices in mid-2006 when the stock of serviced land available for sale fell to under 500 lots in mid-2006.”
“Although there is approximately three times as many lots on the market than during 2006, the state’s population is growing faster and interest rates and land prices are lower, creating rising demand.”
According to State Government figures there was a 56% increase in the number of lots in applications for conditional subdivision approval comparing Dec 2011 with the same period in 2012.
“Developers are pushing lots through the system, the challenge is doing that in a timely way.”
The average land price in Perth increased 1.2 per cent to $225,000 in the March quarter with 48 per cent of vacant lots sold by the largest developers in Perth priced under $200,000.
According to separate research conducted by UDIA, three-quarters of urban development professionals expect new dwelling sales in Perth to increase over the next six months.
Figure 2 – Residential Land Sales, Perth (inc. Peel), quarterly (source: UDIA WA)