New land sales figures from the Urban Development Institute of Australia (UDIA WA) show that demand for new land in Perth remains strong despite expectations from some commentators that we would see sales numbers fall off a proverbial cliff in the wake of heightened activity prompted by government stimulus measures last year.
“Our figures show that the number of new land sales in Perth declined 15% in the June 2021 quarter but remain approximately 60% above 2019 sales figures,” UDIA WA CEO Tanya Steinbeck said.
“This is representative of just how healthy the market is now compared to where we were in 2019 following about five years of stagnant market conditions,” Ms Steinbeck said.
“The unprecedented level of sales prompted by the government stimulus measures last year was remarkable and unexpected,” Ms Steinbeck said.
“While that level of demand is unlikely to be equalled anytime soon, we can see that demand is still very strong and we expect that to continue well into next year and beyond,” Ms Steinbeck said.
The new land market reached a five-year peak in the September 2020 quarter with close to 3,500 sales in that one quarter, prompted by the generous government grants on offer.
This quarter (June 2021) recorded 1,640 sales, well above the 1,047 sales recorded in March 2019, which was the land markets lowest point in five years.
“The continued strength in the Perth land market is testament to WA’s strong economic growth, coupled with record low interest rates and accommodative lending criteria, as well as the fact that Perth remains one of the most affordable capital cities in the country,” Ms Steinbeck said.
“In fact, despite the rampant sales activity last year, the price of new land has remained steady, currently sitting at $236,122,” Ms Steinbeck said.
The average price of new land in Perth during the June quarter is just above the five-year rolling average ($232,290).
While the market is performing well, Ms Steinbeck does warn that land supply could be an issue in the coming years.
“While sales figures remain strong, construction activity has dropped off this year as sales numbers have reduced and developers contend with the skills shortage that is impacting WA,” Ms Steinbeck said.
The number of lots under construction predicted for release in the next 12 months has declined by 8.4% according to UDIA’s figures.
“Lower construction rates does raise concerns about how housing supply in the coming years may be affected,” Ms Steinbeck said.
“If developers cannot get the workers they need to get lots on the ground and ready for market, we could see more people struggling to find a home,” Ms Steinbeck said.
“The McGowan government has acknowledged that we have an issue with getting skilled workers and we hope that they will work quickly to remedy that situation,” Ms Steinbeck said.
The need for a substantial level of new lots in the pipeline to meet future demand is also reinforced by UDIA WA’s research partner and Urbis Director Tim Connoley.
“There is a strong level of interest from people wanting to move to WA for a range of reasons, not least the employment opportunities on offer and perceived safety from the pandemic,” Mr Connoley said.
“Interstate migration – despite the hard border – is at the highest level since 2012 and the state government has made it a priority to encourage people to move west as an outcome of the Skills Summit,” Mr Connoley said.
“We expect demand for land to continue steadily into next year and increase further once international borders start to reopen and students, tourists and workers apply to come here,” said Mr Connoley.
“Many Aussies moved back home to WA during 2020. That movement, coupled with positive interstate migration levels has been a key driver for increased demand for housing,” said Mr Connoley.
“Overall, the outlook is very positive for the new land market in WA,” Ms Steinbeck said. “We just need to keep our eye on the supply side of things to ensure we are adequately able to house the people that we want, and need, to come here in the next few years.”
End.
Contact:
Gemma Osiejak
Executive Manager Communications & Marketing
P: 0421 506 819
E: gosiejak@udiawa.com.au