{"id":42068,"date":"2023-01-24T09:08:01","date_gmt":"2023-01-23T20:08:01","guid":{"rendered":"https:\/\/propertynoise.co.nz\/au\/?p=42068"},"modified":"2023-01-24T09:08:01","modified_gmt":"2023-01-23T20:08:01","slug":"glory-days-over-as-residential-land-prices-decline","status":"publish","type":"post","link":"https:\/\/propertynoise.co.nz\/au\/glory-days-over-as-residential-land-prices-decline\/","title":{"rendered":"Glory days over as residential land prices decline"},"content":{"rendered":"

PHOTO: Two cities have dragged land sales prices into negative territory nationally<\/strong><\/p>\n

REPUPLISHED WITH PERMISSION | API MAGAZINE<\/a><\/p>\n

Large price falls in Brisbane<\/a> and Sydney<\/a> have dragged land sales values down nationally after two years of strong growth.<\/p>\n

Values in Greater Brisbane also down for the quarter by 14.3 per cent, while Sydney\u2019s median land price was down 8.6 per cent in the September quarter and 11.6 per cent over the past two quarters.<\/p>\n

\"Selling<\/a><\/div>\n
\n
\n

Jason Oppenheim: Sydney\u2019s luxury homes double the price of LA\u2019s, TV star says<\/a><\/h2>\n<\/header>\n<\/div>\n

Modest growth Melbourne, Hobart, Adelaide and Perth was not enough to stop land sales slipping into negative territory nationally.<\/p>\n

The\u00a0HIA-CoreLogic Residential Land Report<\/em>, which provides updated information on sales activity in 51 housing markets across Australia, showed new residential land prices declined by 0.2 per cent in the September Quarter 2022 to $328,954.<\/p>\n

This followed a stellar run in which new residential land prices rose 26 per cent in less than two years.<\/p>\n

The overall national trend means land has joined the wider property market in a downwards trajectory, after national property prices recently experienced\u00a0the\u00a0<\/a>largest housing market decline on record.<\/p>\n

\"Residential<\/p>\n

Housing Industry Association (HIA) Senior Economist, Tom Devitt, said the stabilisation of new residential land prices and falling sales volumes did not reflect an end to underlying shortages of land.<\/p>\n

\u201cRather, they reflect a combination of worsening affordability and the shock of the RBA\u2019s rate hiking cycle to consumer confidence and borrowing capacity.<\/p>\n

\u201cDeclining prices, together with record low sales volumes, are disguising the underlying shortage of land in the short term.<\/p>\n

\u201cSales volumes started plummeting two years ago when land prices were soaring, which is strongly indicative of a shortage of shovel-ready land in the face of strong demand.<\/p>\n

\u201cThe recent price declines have also coincided with the steepest rate hiking cycle in a generation.\u201d<\/p>\n

\"Growth<\/div>\n

Mr Devitt said a recovery in demand depends largely on the\u00a0RBA\u2019s future cash rate decisions, a view shared by other industry professionals.<\/p>\n

Nigel Satterley, founder and Chief Executive of Satterley, told\u00a0API Magazine<\/em>\u00a0that land prices across Australia would rebound quickly.<\/p>\n

\u201cThe steep rise in civil construction costs will see land prices across Australia increase by about 5 per cent in the coming months.\u201d<\/p>\n

Ballarat-based Ben Halsall, responsible for land sales for Buxton, said the frequency of interest rate increases has, for now at least, had an impact on those looking to purchase.<\/p>\n

\u201cThe impact on affordability of higher interest rates and restricted borrowing capacity has simply translated into \u00a0moderated land sales rates.<\/p>\n

\"Sydney<\/a><\/div>\n
\n
\n

THE LIFE OF THE RICH & FAMOUS: Inside Sydney\u2019s priciest homes of 2022<\/a><\/h2>\n<\/header>\n<\/div>\n

\u201cThis in turn will reduce the frequency of new stage releases and land options coming to market.\u201d<\/p>\n

Mr Devitt said that when demand recovers, the underlying shortage of developable land will further worsen the affordability challenges already facing aspiring homeowners and renters.<\/p>\n

\u201cLower land prices and more affordable housing must be driven by a greater supply of land, shorter delivery times and fewer regulatory and tax imposts, not by the destruction of confidence,\u201d Mr Devitt said.<\/p>\n

Land sales around the country<\/strong><\/h2>\n

Despite Sydney slipping more than 11 per cent over the past two quarters, it remains Australia\u2019s most expensive market, with lot prices at $614,500, which is still up by 7.8 per cent on a year earlier.<\/p>\n

The median price of residential land in Greater Melbourne also surged during the pandemic, but not as fast as in Greater Sydney. Greater Melbourne is the second most expensive capital city for residential land in Australia with lot prices still increasing, up by 4.5 per cent in the September Quarter 2022 to a new high of $439,000. This is up by 26.1 per cent compared to a year earlier.<\/p>\n

In regional Victoria, Mr Halsall said developer pricing has held in the face of rising interest rates.<\/p>\n

\"Sydney<\/a><\/div>\n
\n
\n

Sydney house prices drop at the fastest rate on record | WATCH<\/a><\/h2>\n<\/header>\n<\/div>\n

\u201cWith very low rental vacancy rates, population movement to regional Victoria due to better affordability, decentralisation, and lifestyle, and also excitement about the 2026 Commonwealth Games in Ballarat in particular, there is a lot of optimism about future prospects regionally.\u201d<\/p>\n

\"Median<\/p>\n

Over the course of the pandemic, Greater Hobart has overtaken Brisbane, Perth and Adelaide to become the third most expensive capital city for residential land.<\/p>\n

Prices in Greater Hobart are even higher now than they were in Greater Melbourne at any time before the pandemic. The median price of residential land increased by 16.7 per cent in the September Quarter 2022 to a new high of $350,000. This is 29.6 per cent higher than a year earlier.<\/p>\n

We are currently seeing a solid level of land supply as civil construction delays ease.<\/p><\/blockquote>\n

–\u00a0Nigel Satterley, Chief Executive, Satterley<\/p>\n

Adelaide overtook Brisbane and Perth during the pandemic to record a median price of $319,990 in the September Quarter 2022, up by 6.7 per cent on the previous quarter and 45.8 per cent higher than the same time a year earlier.<\/p>\n

The median price of residential land in metropolitan Perth was $244,000 in the September Quarter 2022, up by 1.5 per cent on the previous quarter and 0.4 per cent higher than a year earlier.<\/p>\n

Mr Satterley suggested\u00a0supply issues were easing in Western Australia, Victoria and Queensland, where Satterley’s operations were based.<\/p>\n

\u201cWe are currently seeing a solid level of land supply as civil construction delays ease and activity gets back on track and I expect this will ease further within six months.<\/p>\n

\u201cIn WA, land sales in the growth areas are sitting at about 100 a week, in Victoria (including Geelong and Ballarat) land sales are at about 225 a week, and in South East Queensland about 100-150 a week.\u201d<\/p>\n

At $240,000, Brisbane\u2019s median price is 1.3 per cent up on a year earlier even allowing for it having the biggest recent reversal of fortunes, making the Queensland capital the most affordable capital city for land in the country.<\/p>\n

The weighted median price of residential land for the capital cities was $342,072, down by 1.9 per cent per cent over the quarter, though still up by 10.7 per cent compared to the same period a year earlier.<\/p>\n

East coast interest rate sensitivity<\/h2>\n

The impact of rising interest rates on land prices could well depend on which side\u00a0 of the country you\u2019re talking about.<\/p>\n

According to Tanya Steinbeck, CEO of the WA chapter of the Urban Development Institute of Australia (UDIA WA), the east coast states could be more susceptible to another round of rate hikes.<\/p>\n

\n

Before attending an auction, bidding on a property, or seeking finance, it’s crucial to understand how the changing interest rate environment is impacting property sale processes and loan finance.<\/p>\n<\/div>\n

\u201cFurther interest rate hikes will work to dampen buyer demand, however, this is likely to be felt much more acutely on the east coast than in WA, where prices have not experienced the escalations that have occurred in other capital cities,\u201d Ms Steinbeck told\u00a0API Magazine<\/em>.<\/p>\n

\u201cGiven ongoing demand for new land, UDIA WA expects that prices in WA will remain steady and constraints on supply will remain albeit less critical.\u201d<\/p>\n

\u201cPerth new land prices have remained relatively stable throughout the Covid pandemic and into the last year with prices rising incrementally due to WA\u2019s strong economic growth, high employment rate and positive overall outlook.<\/p>\n

\u201cOngoing supply constraints have also put pressure on prices as developers reflect higher materials and skills costs.\u201d<\/p>\n

As reflected in a\u00a0chronic shortage of rental properties<\/a>\u00a0and affordable and social housing,\u00a0Ms Steinbeck said there was no argument that an increase in supply was needed in 2023, but constraints on industry being able to deliver that supply remained, particularly due to the ongoing skills shortages.<\/p>\n

\u201cDespite the seriously constrained housing supply pipeline, unlike in other parts of Australia, the WA land market remained relatively steady in terms of average land value, with the average price of new land in the Perth Metro Area (according to UDIA WA figures) peaked at around $247,000 in September quarter of 2021 and is now back down to around $232,988 which is well below the average in other capital cities.\u201d<\/p>\n

 <\/p>\n

MOST POPULAR IN NEW ZEALAND<\/span><\/h3>\n