The most recent HIA-RP Data Residential Land Report highlights a significant decline in residential land sales over the September 2012 quarter.
RP Data's research director Tim Lawless noted that "land developers and builders are facing the challenge of providing affordable house and land packages at a time when land costs, as well as construction costs, continue to rise. The median price of a vacant block of land rose 3.8 per cent over the September quarter last year despite the fall away in volume.
"The broader housing market remains on a recovery trajectory, and I would be surprised if the vacant land market continued the slippage in transaction numbers we saw in September. Low interest rates and a subtle improvement in consumer confidence, together with Government incentives now more focused on new housing, are likely to be the driver behind a gradually improving market" he concluded.
The weighted median residential land value in Australia increased by 3.8 per cent in the September 2012 quarter to $197,807, which took the land value 4.2 per higher the September 2011 quarter.
The median value for capital cities increased by 5.1 per cent to $225,795 – a 6.0 per cent rise on the previous year, while the median value for regional Australia was $155,214.
Commenting on the figures, HIA Chief Economist Harley Dale stated: "residential land sales fell by 17.8 per cent in the September 2012 quarter, although the volume was still 14.9 per cent higher than the record low set a year earlier."
Mr. Dale went on to cite a reduction in the cost of new housing, which is initially caused by abnormally high levels of taxation, as one of the vital components required to kick start the home building recovery.
One market that has already affected such a policy is The Gold Coast. The Gold Coast City council has embarked upon an initiative seeking to reduce infrastructure costs for a six-month period.
HIA Executive Director for the Gold Coast and Northern Rivers Colin Buttenshaw welcomed this approach and encouraged state and federal Governments to follow suit by affecting similar proposals nationwide. The aim of implementing this action is to address the disproportionately high levels of taxation on housing, thus improving affordability.
"Overall though," concluded Mr. Buttenshaw, "residential land sales, a key leading indicator of housing starts, are signalling a rocky road for new home building in 2013."
For more information about the residential property market in your areas of interest, please feel free to stop by your local Century 21 Real Estate office for clear and expert advice.