New residential land sales have continued to decline in the June 2022 quarter according to data released today by the Urban Development Institute of Australia (UDIA WA).

New land sales were down by 17% compared with the March 2022 quarter and down 4.6% over the year.

“While sales have declined, UDIA WA has anecdotal feedback from our members that demand remains relatively strong,” UDIA WA CEO Tanya Steinbeck said.

“Developers are hamstrung by ongoing skills and materials shortages that are compounding land supply shortages following the roller coaster ride of 2020 and 2021,” Ms Steinbeck said.

“One of the biggest impediments to land sales currently is the timeframes to get titled land to market and this is starting to impact on purchasing decisions,” Ms Steinbeck said.

“Civil contractors are competing against major government infrastructure works for a limited pool of workers and a restricted supply of materials such as limestone blocks,” Ms Steinbeck said.

However, the outlook is not all bleak.

“While sales numbers have declined, we are still recording higher sales numbers than pre stimulus measures in early 2020,” Ms Steinbeck said.

According to the UDIA WA survey, 1,565 new lots were sold in the June 2022 quarter across the Perth metropolitan area and this is compared with 1,466 in March 2020 and just 1,286 in December 2019.

“Construction activity has also picked up this quarter,” Ms Steinbeck said.

“We are seeing a 2% increase in lots under construction for release in the next year compared with last quarter and there has been a 46% increase compared with same time last year,” Ms Steinbeck said. “The largest proportion of lots under construction is in the popular North West corridor of the Perth Metro area.”

“Hopefully this is a sign that there is more capacity building up in the market moving forward,” Ms Steinbeck said.

Despite the uptick in construction activity, Ms Steinbeck warned that land supply constraints were still hampering the new land market considerably.

“Perth is one of the most affordable capital cities in Australia and we want to be able to attract people to live and work here,” Ms Steinbeck said.

“We also need to continue to attract investors over here to boost rental stocks,” Ms Steinbeck said.

“Developers are experiencing increased interest from investors returning to the WA market, however we need to keep supply flowing in order to continue to convert that interest to sales,” Ms Steinbeck said.

“In order to meet the needs of all buyers, we need to be delivering a range of stock to the market at different price points and in a range of locations to suit different lifestyles and budgets,” Ms Steinbeck said.

Urbis Director Tim Connoley reiterated the need for more housing supply, noting the latest Census data reflects WA’s rapid population growth.

“Despite heightened border restrictions, Western Australia continued to draw people to the west over the last two and half years,” Mr Connoley said.

“Population growth was robust through 2021 at circa 30,000 per annum and there are early signs that international migration is increasing,” he said.

“There are strong business conditions – some of the strongest in over a decade – across the Western Australian economy.

“This is translating into a strong pipeline of business investment, with more than $120 billion of major infrastructure projects across the state – more than any other state in Australia,” Mr Connoley said.

“With low unemployment and record job vacancies, a diverse, affordable supply of land and housing is required,” he said.