THE LAND MARKET IN PERTH IS WELL ON THE ROAD TO RECOVERY WITH SALES INCREASING FOR THE THIRD CONSECUTIVE QUARTER IN THE THREE MONTHS TO SEPTEMBER, 2012.
Every three months UDIA surveys our forty largest developers to determine trends in the residential market sector and for the third quarter in a row the news is positive.
Sales of residential vacant land in the Perth and Peel region increased 14.2 per cent over the September quarter to its highest level since September 2009. The combination of tight rental vacancy rates, the rising cost of renting and falling interest rates have combined to make home ownership very attractive.
Since the first of two rate cuts in late 2011, demand for vacant land has strengthened significantly with the number of sales nearly double the September 2011 quarter levels. Having said that, the figures last year were very, very low. Since then we have had three quarters of growth.
Of course we have a long way to go before we would be declaring any form of boom, the sales levels are still around 30 per cent below peak sales volumes experienced in early 2006. It is still a buyers’ market but that is changing in the sub $500,000 house and land package market as that price bracket caters for not only first home buyers but investors and down graders as well.
Price growth has been constrained by the demand for more affordable lots in the sub-$200,000 category and relatively inflated stock levels but that is now changing. Stock levels have fallen by over a third 34 per cent) compared to twelve months ago which is the prelude to price rises.
There is scope for price growth given that vacant land prices in the Perth and Peel region have been steady for three to four years and over that same period there has been strong wages and population growth.
Vacant land price growth however is linked to the outlook of capital growth in the established property market driving demand for land by the middle market, or ‘upgraders’. To date established property prices have been relatively flat but volumes are increasing and existing stock on the market has reduced significantly which makes the outlook positive for price growth in that sector too.
In April this year I said that the market was at 7 o’clock in the property market cycle, where we had come off the bottom but it was still a buyers’ market. I would say we are now close to 8:30 with the clock ticking towards a sellers’ market and price gains when we hit 9 o’clock.