The Age http://business.theage.com.au/ 18th January
Land sales have dropped to decade lows, further eroding the nation's housing affordability as prices continue to rise, according to RPData and the Housing Industry Association.
The volume of nationwide land sales plummeted in the September quarter, falling 57 per cent below the level of a year earlier to 10,000 lots – a level not seen since the September quarter of 2001.
The value of land sold, however, rose 5.2 per cent to a median lot price of $186,629 over the year to September, or 2.8 per cent in the quarter alone.
Even with the shortage, the International Monetary Fund late last year said the local property market could be as much as 10 per cent overvalued, although private groups estimate prices may be further out of whack.
In Melbourne alone, the median residential lot price rose 15.1 per cent in the year to September and 5.5 per cent in the quarter to $189,950. Land sales in the city staged an even bigger retreat, falling 74.2 per cent in the year to September, to about 1500, the lowest since the March quarter of 1991.
In Sydney the median residential lot value fell 2.2 per cent in the quarter to $269,000, unchanged from a year earlier, while the volume of land sales dropped 56.3 per cent over the year to about 700 lots.
In Brisbane, land values declined for the fourth consecutive quarter, shrinking 8.7 per cent over the year to September to $199,000. The number of lots sold dropped by 57.2 per cent over the year to September to 1000.
'Out of control'
“When the median price of a block of land in Sydney is $269,000 it's easy to see why affordability is spiralling out of control,” said RPData senior research analyst.
“When you add on top of the land cost: professional fees, government charges and the actual cost of constructing a home it's no surprise that many Australian's are forced to remain in the rental market, paying off others' mortgages,” said Mr Kusher.
“Undoubtedly something needs to be done to address affordability constraints and governments at all levels need to realise that it is a serious problem,” he said.
Mr Kusher said there is a disconnect in the market when a full-time working adult earning $68,120 per annum would have to pay between $145,000 in Hobart to $269,000 in Sydney for land to build a house on.
“People looking to purchase the land on which to build a house are paying between two and four times their annual wage just to secure the land,” Mr Kusher said.
Queensland
In the September quarter, Sunshine Coast ranked as the most expensive land market with a median lot price of $280,000, while the least expensive land market was Murray Lands, South Australia, where the equivalent piece of land cost $82,500.
Some analysts expect Queensland's flood-affected areas to see land prices dip, as the property exposed to flood risks may decline in value.
HIA senior economist Andrew Harvey said values for residential lots in floodplains may decline in the aftermath of Queensland disasters.
“Personally, I’d be pretty worried about buying land anywhere near a flood area,” he said.
Conversely, property outside of a flood hazard could rise in value, he said, supporting the market.
czappone@fairfax.com.au
Poll: How do you think the floods in Queensland and elsewhere will affect house prices this year?
Push them higher - there'll be stricter planning, limiting land sales 22%
Push them lower - buyers will be deterred by rising costs and economic disruption 42%
Limited impact 16%
Too hard to tell 20%
Total votes: 3922. Poll closed 19 Jan, 2011
Disclaimer:These polls are not scientific and reflect the opinion only of visitors who have chosen to participate.
Land sales have dropped to decade lows, further eroding the nation's housing affordability as prices continue to rise, according to RPData and the Housing Industry Association.
The volume of nationwide land sales plummeted in the September quarter, falling 57 per cent below the level of a year earlier to 10,000 lots – a level not seen since the September quarter of 2001.
The value of land sold, however, rose 5.2 per cent to a median lot price of $186,629 over the year to September, or 2.8 per cent in the quarter alone.
“Land price appreciation is a key cause of Australia's housing affordability problem, with higher prices cascading through the residential market to push up the price of both new and existing houses,” said HIA Senior Economist Andrew Harvey.
Even as the pace of sales slows, Australia faces a roughly 200,000-unit housing shortage, HIA estimates, driven by complicated planning processes, a tax policy that encourages buyers to hold multiple homes, and the slow release of suitable land by real estate developers and governments.Even with the shortage, the International Monetary Fund late last year said the local property market could be as much as 10 per cent overvalued, although private groups estimate prices may be further out of whack.
In Melbourne alone, the median residential lot price rose 15.1 per cent in the year to September and 5.5 per cent in the quarter to $189,950. Land sales in the city staged an even bigger retreat, falling 74.2 per cent in the year to September, to about 1500, the lowest since the March quarter of 1991.
In Sydney the median residential lot value fell 2.2 per cent in the quarter to $269,000, unchanged from a year earlier, while the volume of land sales dropped 56.3 per cent over the year to about 700 lots.
In Brisbane, land values declined for the fourth consecutive quarter, shrinking 8.7 per cent over the year to September to $199,000. The number of lots sold dropped by 57.2 per cent over the year to September to 1000.
'Out of control'
“When the median price of a block of land in Sydney is $269,000 it's easy to see why affordability is spiralling out of control,” said RPData senior research analyst.
“When you add on top of the land cost: professional fees, government charges and the actual cost of constructing a home it's no surprise that many Australian's are forced to remain in the rental market, paying off others' mortgages,” said Mr Kusher.
“Undoubtedly something needs to be done to address affordability constraints and governments at all levels need to realise that it is a serious problem,” he said.
Mr Kusher said there is a disconnect in the market when a full-time working adult earning $68,120 per annum would have to pay between $145,000 in Hobart to $269,000 in Sydney for land to build a house on.
“People looking to purchase the land on which to build a house are paying between two and four times their annual wage just to secure the land,” Mr Kusher said.
Queensland
In the September quarter, Sunshine Coast ranked as the most expensive land market with a median lot price of $280,000, while the least expensive land market was Murray Lands, South Australia, where the equivalent piece of land cost $82,500.
Some analysts expect Queensland's flood-affected areas to see land prices dip, as the property exposed to flood risks may decline in value.
HIA senior economist Andrew Harvey said values for residential lots in floodplains may decline in the aftermath of Queensland disasters.
“Personally, I’d be pretty worried about buying land anywhere near a flood area,” he said.
Conversely, property outside of a flood hazard could rise in value, he said, supporting the market.
czappone@fairfax.com.au
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