New land sales in Perth remain strong despite the winding up of State and Federal government stimulus measures.
Latest figures from the Urban Development Institute of Australia (UDIA WA) show that new lot sales increased by close to 5% during the March 2021 quarter.
“Despite concerns that the Building Bonus and HomeBuilder grants pulled forward demand and market activity would slow significantly once the financial boosts ended, our figures show that the new land market remains buoyant,” UDIA WA CEO Tanya Steinbeck said.
“Buyers are clearly making the most of WA’s strong economic position, low unemployment, record low interest rates and accommodative lending conditions,” Ms Steinbeck said.
UDIA WA’s Urban Development Index records new land market activity in Perth and the regions based on a comprehensive survey of major developers in the state.
“While the quarterly increase in sales is positive, even more significant is the 31% increase in sales for the March 2021 quarter compared with the same time last year,” Ms Steinbeck said.
There were 1,927 new lots sold in the March 2021 quarter compared with 1,466 in the March quarter 2020.
“At the beginning of last year, the market remained sluggish as the five-year market downturn continued and uncertainty was growing with regard to the potential impact of the pandemic,” Ms Steinbeck said. “Fast forward 12 months and we are seeing the result of WA’s strong position in managing the spread of the virus and buyers continued faith in property as a solid investment.”
The value of new land in Perth remains stable, with the average price of new lots increasing just 1% over the quarter and around 7% over the year.
“Perth remains one of the most affordable capital cities in Australia and that is a major drawcard for investors and those looking at coming to Perth to settle down,” Ms Steinbeck said.
In terms of forward demand, Ms Steinbeck says that a continued uplift in construction activity represents the development industry’s confidence in ongoing demand for land over the coming year.
“Construction activity is up 47% on the same time last year,” Ms Steinbeck said. “Developers lifted their activity levels significantly following the huge lift in demand prompted by the government stimulus and they are keeping the momentum going this year.”
UDIA research partner and Urbis Director David Cresp says that particular growth areas included the North East corridor and North West corridor which were both benefiting from the METRONET roll out.
In 2015 the North East corridor accounted for only 20% of sales and this has now grown to 28% of sales (547 lots) and become the strongest selling corridor. Most of these sales occurred in the City of Swan.
“The North East corridor has really opened up and whilst five years ago this corridor was dominated by three key estates today areas such as Brabham, Henley Brook and Bennet Springs are all experiencing strong levels of activity,” Mr Cresp said.
The North West corridor has also continued to see high levels of activity. Sales in Banksia Grove are high, and the coastal suburbs of Alkimos and Eglinton are also continuing to mature.
Mr Cresp also notes that investors are starting to return to the market.
“Record low interest rates coupled with rising prices and rents has begun to entice investors into the residential market to achieve reasonable returns,” said Mr Cresp. “The value of new loan commitments for residential investment in WA nearly doubled, from $237m in March 2020 to $462m in March 2021, matching the loan commitment values seen in early 2016.”
While the land market in Perth is looking very positive, Ms Steinbeck warns there needs to be a focus on a longer term population strategy for WA over the coming years.
“We need to ensure we are able to maintain economic growth by attracting skilled workers and investors into the state moving forward,” Ms Steinbeck said.
“A clear strategy that looks at how we are going to maintain population growth following the border closers and impact of COVID-19 is critical.”
Ends.
Contact:
Gemma Osiejak
Executive Manager Communications & Marketing
P: 0421 506 819
E: gosiejak@udiawa.com.au