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18 May 2022

Shortages put the bite on land sales

The West Australian

Restricted land supply and relatively slow construction have forced WA land sales down by more than a fifth in the first quarter of the year.

New figures from the Urban Development Institute of Australia (WA), show there were 1880 new land sales in the March 2022 quarter, down 22 per cent. Chief executive Tanya Steinbeck said sales had been hampered by materials and skills shortages that had constrained the ability to deliver land to the market.

“I think we would be seeing higher sales figures if industry was able to deliver more land to the market in a greater variety of locations,” Ms Steinbeck said.

The UDIA figures highlight how the residential construction boom is smaller than the previous boom, and that construction is slower.

Ms Steinbeck said 3855 lots were predicted to be release in the next 12 months,

But in the last boom, construction activity peaked at close to 6000 lots expected for release in the 12 months from the March 2014 quarter. Sales had peaked at 2660 lots in the March 2013 quarter.

“If we look at construction levels and the number of lots developers are expecting to deliver to the market in the next 12 months, it is not even close to the activity that was occurring in previous boom cycles,” Ms Steinbeck said.

“Following the stimulus-led boom this time around, sales peaked at 3407 lots in the September 2020 quarter, but we have only been seeing construction activity hover between 3000-4000 lots under construction each quarter over the last couple of years. This shows we just aren’t delivering at the same levels as we have done in previous periods of high demand and provides further evidence that if demand continues, we will end up with a land supply shortage as predicted.”

Ms Steinbeck said while the volume of sales has dipped, activity remained elevated compared with pre-stimulus times. In the March 2019 quarter, only 1047 land sales were recorded.