The Urban Development Institute of Australia (UDIA) launched the highly anticipated annual State of the Land Report at the UDIA National Congress in Perth on Wednesday.
The report now position’s Perth as the most affordable capital city in Australia with a median new land price of $228,000. With the median land price growing a modest 6% in 2022 Perth has assumed the mantle from Adelaide as having the most affordable residential blocks in the country.
This compares to an astronomical average price of $716,381 in Sydney for new land and $382,125 in Melbourne, and is a whopping 42% lower than the combined capital city average.
“New land sales in Perth have slowed to more sustainable levels and there is a strong pipeline of demand moving forward,” Ms Steinbeck said.
“We will, however, need to keep our eye on longer term supply issues and ensure there is a pipeline of housing to meet that ongoing demand.”
Issues around forward supply of housing is highlighted across the nation in the report as new dwelling growth fundamentally is not keeping up with population growth. The rental vacancy rate is also the tightest on record across the country.
According to the report, the strong recent performance of the national greenfield sector has helped soften the blow from the on-going softness in multi-unit supply, however with both the greenfield and multi-unit sectors set to experience reduced output in the coming three years, aggregate capital city new residential market supply will decline to the lowest levels recorded in a decade.
“WA is certainly not on its own when it comes to housing supply constraints, that is why UDIA is working at a state and national level to address the challenges with delivering adequate housing to the market,” Ms Steinbeck said.
While the land market has remained relatively stable despite the headwinds over the Covid impacted years, multi- residential development, particularly apartment projects, have not faired so well.
According to the report, annual completions of multi-unit dwellings were down 20% across Perth over the year to December 2022 and completions are expected to continue to decline over the next three years given construction is down 54%.
“The lack of action in the multi-unit sector is concerning,” Ms Steinbeck said. “In the context of the drive for more infill development and the delivery of greater housing choice, we need to ensure we keep all options on the table to support the delivery of multi-unit projects in both the medium and high-density categories.”
“These are the types of projects that take the longest to deliver, so when the well runs dry in terms of sufficient supply of apartments in the pipeline – the pain from lack of housing choice will be felt for an extended period.”
In particular, UDIA WA has recommended that the McGowan Government make the Off-the -Plan Duty Rebate Scheme permanent and extend it to apartment projects under construction,” Ms Steinbeck said. “We also want to see the Foreign Buyers Surcharge removed.”
“For apartment projects in particular, developers rely heavily on presales in order to make a project viable,” Ms Steinbeck said. “These measures will assist in building much needed consumer confidence and attracting investors in this sector of the market.”
“In addition our recommendations in relation to the built form sector, UDIA WA supports the leadership role of planning in bringing relevant government agencies together to deliver on the strategic vision behind the Perth and Peel @3.5m planning documents that aim to accommodate sustainable population growth and shape Perth’s future as a more vibrant and connected city,” Ms Steinbeck said.
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