No place like home

HOME construction is becoming an increasingly attractive option as the median house price pushes through the $200,000 mark, with growing numbers of Perth investors sinking their money into house and land packages.

The March 2003 quarter has revealed strong land sales and, according to Real Estate Institute of Western Australia public affairs direct Lino Iacomella, investors accounted for a significant portion of the sales.

“There has been a significant increase in investors buying land, driven by foreigners to a large extent,” he said. “Land sales were particularly strong in the March quarter.”

Mr Iacomella said investor interest in house and land packages was strong in Canning Vale, Brighton, Quinn’s Rock and Beeliup.

Land sales in the southern corridor had increased greatly, according to Stockland sales manager Rob Vis.

Mr Vis said growing numbers of investors were purchasing house and land packages for rentals, as well as for capital growth.

The combination of increasing land prices and escalating building costs, which are expected to go up further with the implementation of the new environmental housing standards in July, means well-located investors stand to make good profits.

“With a brand new home investors can turn a profit within 12 months,” Mr Vis said.

Stockland had noted an increase in foreign investment, however the local market demand was the main driver, he said.

The increase in investor demand for land was due, in part, to the movement of investments to better locations as coastal land dried up, Mr Vis said.

“Port Kennedy has had a dramatic increase in sales. We are struggling to keep up with demand,” he said.

Stockland is anticipating a 10-12 per cent slow down and a more investor driven market going into 2004.

Peet and Company managing director Warwick Hemsley said there was more pre-selling of land than ever before due to the demand for land outstripping the rate of supply.

Mr Hemsley agreed that the increasing median house price was a driving factor in investment in house and land packages.

Australand sales and marketing manager for WA land, Graham Napier, said the company’s land sales were outstanding and there had been increased investor numbers.

“Good, prime land is running out,” he said. “All developers are struggling to keep up with supply; once you get scarcity, you get urgency.”

Mr Napier said there were a few offshore buyers interested in Perth estates, with one Singapore buyer securing five lots in Australand’s Gwelup estate.

But not all land developers have noticed an increase in investors. Satterley Property Group director of property operations Lou Dalessandro said there had been a high volume of sales, but no huge increase in investors.

Mr Dalessandro said the company sold 401 lots in the March 2003 period compared with 279 in the same period last year.