Earlier this week the Housing Industry Association (HIA) in conjunction with RP Data released the Quarterly Land Report for September 2010. The Report highlighted that land sales volumes were at their lowest levels in a decade and -57% lower than the same quarter last year.
Despite the sharp drop in sales activity, the median value of the land increased by 2.8% during the quarter to $186,629. When looking across the combined capital cities, land values increased by 4.5% during the quarter, compared to a fall of -0.4% in regional areas of the country. Despite the fact that land tends to be more expensive within capital cities, three of the five most expensive markets for vacant land across the country are actually outside of capital cities as detailed in the table below.
Most expensive land markets, as at September 2010
Within capital city markets, median land values range from between $145,000 in Hobart up to $269,000 within Sydney. Meanwhile, despite having the most affordable vacant land market, Hobart also has the largest median lot size at 697sqm whilst Adelaide’s average lot size is the smallest at just 377sqm. Across the capital cities, the median rate per square metre of land ranges from $208/sqm in Hobart up to almost $516/sqm in Perth. The table below details the relevant data.
Capital city markets key land data as at September 2010
The data certainly highlights the growing affordability issues and whilst growth in values of homes has eased in recent times, strong growth in land values persist, indicating that Governments at all levels are doing little to assist in making housing more affordable.
Recent data released by the Australian Bureau of Statistics showed that the average adult working full-time earned $1,310/week or $68,120 annually. Based on this data, the average adult working full time would have to spend between two and four times their average annual wage just to secure the land in which to build a new home. Obviously many home buyers do have dual incomes which brings down the cost somewhat however, the result highlights the ongoing affordability issues. When you consider that once the land is secured, owners still need to build the home, pay the consultants and pay the Government fees and charges it’s easy to see why many renters feel that they may never be able to purchase their own home.
These higher prices also impact on the cost of existing housing and have much wider market implications than just the impact on brand new housing.
Tell us your opinion, do you agree with the findings and what can be done to make land more affordable?