The price of a new block of land in Perth has hit $305,177, as a lack of supply continues to impact the market.
Residential land prices have hit a 17-year high of more than $300,000, representing a 25 per cent increase on 12 months ago.
The cost of new land in Perth’s metropolitan areas has reached an average $305,177 in the June quarter, up from $278,688 last quarter and well above the $244,307 five-year average.
The data is tracked by the Urban Development Institute of Australia WA, in its recent urban development index.
According to the UDIA, the recent quarter marks the first time since 2007 the cost of a block of land has exceeded $300,000.
In that year, which was characterised by a mining boom, land prices averaged $317,000 in the December quarter.
Average lot sizes have decreased steadily over the years, with a current average block at 385 square metres compared with the 364sqm rolling average.
According to Australian Bureau of Statistics data, average lot sizes in Perth in 2006-07 were 554sqm.
Therefore, on a square-metre basis, residential land in Perth is more expensive than ever.
UDIA WA chief executive Tanya Steinbeck said the price hike came after years of stability in the new land market.
“While the established market has experienced significant price escalation since 2020, the new house and land market has managed to retain a level of price stability,” she said.
“That is all starting to change with a 9.5 per cent lift in the average price of land this quarter, and that is a twenty-five per cent lift year on year.”
Similar to 2007, a shortage of new land across the metropolitan area is coupled with high demand.
There has been a recent increase in construction activity, which theoretically could ease pressure on prices. However, Ms Steinbeck said this increase was not sustainable.
“We know that developers are struggling to keep up with demand, and they just don’t have the depth in their forward pipeline to keep construction up to the current levels, or indeed to increase construction levels further, which is what the market really needs,” she said.
Urbis director David Cresp added that apartments would also be in low supply in coming years.
“Whilst 2024 will see the highest year of apartment completions that we have seen for some time, with 2,566 apartments forecast to be completed, the forward supply pipeline is at much lower levels,” he said.
“In the first six months of 2024, only 661 apartments commenced construction in developments of twenty-five or more apartments.
“This compares to an average year between 2014 and 2022 where almost 2,000 apartments were commencing construction each year.”
