A new report released on April 30th from the Housing Industry Association (HIA) in conjunction with RP Data found that Western Australia saw land prices surge over this period, making Perth home to some of the most expensive markets for lots. Due to this activity, land prices have now reached a median of $269,000 after rising by 10.2 per cent. This now brings the median price to approximately $600 per square metre.
HIA Western Australia Executive Director John Gelavis noted that supply pressures in the state capital’s land market are “severe”. Mr Gelavis explained that high demand, strong price rises and “shrinking transaction volumes” is not accommodating the city’s housing requirements.
Although a low supply of land will likely lead to rises in house prices, this could lead to encouraging conditions for those who own investment real estate in Perth. As well as this, vacant land owners could take advantage of current market conditions in order to secure a strong sale price for their lot.
“There is significant pent-up demand for new dwellings in WA and the smoother release of residential building land will ensure that this demand is met in an orderly fashion,” said Mr Gelavis.
HIA Senior Economist Shane Garrett said that on a national scale, there are “serious supply issues” in the land market for residential real estate, which is likely due to to higher demand for brand new dwellings across the country.
RP Data Research Director Tim Lawless noted that it’s the many government schemes to encourage people to build or buy new homes along with low home loan interest rates that have contributed to this rise in demand.
An example of this is the New Home Grant in New South Wales, which allows buyers to access $5,000 to go towards the purchase of vacant land, an off the plan home or a brand new property. Vacant land purchases must be below $450,000, while new homes must not exceed $650,000.
“With vacant land prices continuing to rise at a time when volumes have moved lower we can surmise that demand is exceeding supply which in turn drives prices higher,” said Mr Lawless.
If you have got a vacant block of land, why not find out how much it may be worth, by arranging a complimentary appraisal from one of our agents? Call our office today on (08) 9275 7777.