17/07/2014 - 14:50

Land price growth signals policy failure: HIA

17/07/2014 - 14:50

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Land price growth signals policy failure: HIA
The HIA says Perth land supply is coming under sustained pressure.

The latest land sales figures for Western Australia reflect strong demand but an inadequate supply of building-ready lots, according to the Housing Industry Association.

The HIA-RP Data residential land report, released today, showed the median land price in Perth hit $260,000 in the March quarter, up 4.8 per cent on the previous three months and 11.1 per cent higher than the same time last year.

The volume of sales, however, declined by 3.5 per cent in the quarter, to reach a level that was 30.7 per cent lower than the March 2013 quarter, which was a cyclical high.

Median lot sizes came in at 420 square metres, largely the same as the median lot traded in the March 2013 quarter.

“The stability in lot sizes means that prices per square metre have also been rising,” the HIA said.

“The price per square metre rose by $23 to reach $619.”

The HIA said the figures reflected strong demand, borne out in the strong upward pressure on land values.

“Furthermore, the current situation indicates that the residential land market in Perth is facing substantial constraints on its responsiveness to the strong demand,” the HIA said.

Outside of Perth, the Kimberley and the South West were both ranked in the top 10 most expensive regional land markets nationally.

In the March quarter the median lot price in the Kimberley was $235,000, to be the nation's second priciest regional market, while in the South West it was $180,000, good for eighth in Australia.

In the south-east of the state, median lot prices were $160,000, while in the central region median prices were $139,000.

The only region to record an annual increase in median land prices was the South West, with a 5.9 per cent gain.

Kimberley median lot prices fell by 13 per cent, central region prices fell by 7 per cent, while south-east median lot values fell by 5.9 per cent.

“A trend of decline in sales activity across regional WA has emerged in the past six to nine months,” the HIA said.

“In the six months to March 2014, the volume of land sales reached a level that is 15.4 per cent lower than in the same period 12 months previously.”

Nationally, land sales dropped 4.7 per cent by volume between March 2013 and March 2014, while the median lot price was up 7.5 per cent across capital cities to $205,248.

HIA chief economist Harley Dale said the acceleration in prices in the March quarter was cause for concern.

"The upward trajectory for residential land prices since mid last year is steeper than it should be," Dr Dale said.

"There is clearly a policy failure this cycle, as in many before it, to ensure a supply of shovel-ready land commensurate with the demand for new housing."

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