Perth land market shows clear signs of recovery as economic confidence improves
Perth’s land market is finally showing clear signs of recovery with positive growth in price and sales following several years of downturn.
The Urban Development Institute of WA has categorically called the bottom of the market, with new land sales up 4 per cent during the December quarter and price growth recorded.
UDIA WA President Nick Allingame said new land values increased by a moderate 0.5 per cent during the December 2017 quarter to $235,941.
“The average price of land in Perth has increased for three consecutive quarters and reflects the incremental growth that the region is experiencing as confidence returns to the market after a period of uncertainty,” he said.
“Given we are at the beginning of this new market cycle, and interest rates are expected to start rising this year, now is definitely a great time to get into the new land market in Perth.
“All indicators are pointing to a pickup in demand for land moving forward and that is likely to go hand-in-hand with further price increases during 2018 and beyond.”
Stockland WA general manager residential Col Dutton said there were early signs of improved economic conditions in WA, particularly in Perth, which was good news for the future residential land market.
“The West Australian economy is showing signs of improvement with jobs growth just off its strongest level in five years, the population growing at its fastest rate in two years and job vacancies last year outperforming all other states and territories,” he said.
“This is great news for the state and we’re anticipating those positive signs will transfer through to the property market.”
Mr Dutton said more affordable options and low interest rates had led to increased first-home buyer purchases, with homebuyers taking advantage of the current market conditions to take their first steps on the property ladder.
LWP managing director Danny Murphy said though industry sales were subdued with sales during the March quarter being less than the same period in 2017, consumer sentiment had improved.
“Security of employment is the most important factor in the purchase decision. With the more positive outlook for the Western Australian economy, confidence is returning to a number of key sectors, such as mining,” he said.
“Whilst there will be no quick fix, the road to recovery appears to have commenced.”
Mr Murphy said a key factor to market improvement was the stock of established homes.
“This stock needs to diminish for demand for new to re-emerge,” he said.
“A number of ‘middle ring’ suburbs with prices around $1 million are starting to move. This movement is expected to spread to the outer suburbs over 2018 and generate improved demand for new product by the December quarter of 2018.”
The residential land market remained competitive with signs of a slight improvement when compared to 2017, Satterley Property Group chief executive Nigel Satterley said.
“The market is stabilising in certain coastal areas, however our growth corridors still remain highly competitive,” he said. “Harrisdale/Piara Waters is one of the highest growth areas in the country. Other high growth include Vale and Golden Bay.”
Housing Industry Association WA executive director John Gelavis said high levels of competition were providing great deals for people thinking about building a new home.
“Consumers, like first-home buyers, are taking advantage of state government stimulus such as the first-home owner grant and stamp duty exemptions,” he said.
“Keystart finance is also an important element that is of great support for first-home buyers.”
UDIA new land data shows there were 1419 land sales during the December quarter, at an average price of $235,941.
The average size of lots sold was 382-square metres, while the number of lots under construction for release within 12 months was 2492.
Lot sales were down 14.5 per cent compared to December quarter 2015 data, where 1658 lots were sold at an average price of $235,820.
While the number of lots under construction predicted for release over 12 months was down 68 per cent across the Perth metro area compared with what was predicted five years ago, construction numbers were stabilising as supply evened out with demand, Mr Allingame said.
“We expect those figures to start creeping up over the next couple of quarters,” he said.
Furthermore, the December 2017 quarter data revealed the North West metropolitan region — incorporating the Cities of Joondalup and Wanneroo — dominated the market with 29.3 per cent of sales across Perth.