Australia

UDIA State of the Land 2017 released

OVER 57,000 new lots were released in greenfield communities in the major capitals, the highest number in the eight year history of the National Land Survey Program (NLSP), and over 53,000 lots were sold, according to the 2017 State of the Land report.

UDIA State of the Land Report 2017

The report is sponsored by the Urban Development Institute of Australia (UDIA) and based on the NLSP by Charter Keck Cramer and Research 4, and provides an analysis of Australia's greenfield land market across 1,200 new estates being undertaken by 860 developers in the five major capital cities.

Across all the estates in the NLSP, the median advertised lot price rose 10 per cent in 2016, to take the total rise in the past four years to 24 per cent.

In Sydney, where the supply constraints are substantial, the median advertised land price jumped 35 per cent, or $120,500 in the two years to December 2016. In Perth, where the supply now exceeds demand, the advertised price dropped 12.5 per cent in the same period.

The report states that land release lags in South East Queensland, in Melbourne and particularly in Sydney, with almost 40,000 land lots needed in the eastern seaboard capitals to bridge the gap between the land supplied over the last five years and the new detached housing required under the metropolitan population and planning targets.

"Only in Melbourne has the supply backlog been substantially reduced. In Sydney it would take near an additional year of release, at the elevated rates of 2016, to clear the supply deficit," the report adds.

Key findings of the report include:

Supply

  • Melbourne, which now averages the release of around 5,600 lots a quarter, accounts for almost 40 per cent of the nation's new housing lots, but it is near its development ceiling.
  • Sydney, where lot production jumped 18 per cent, to over 3,100 in the last quarter, is also touching new highs, but still has a long way to go to satisfy the current and projected demand levels.
  • A myriad of constraints, from infrastructure delays to slow title registration, restricts the ability of the sector to respond to increased demand, despite the best intentions of state governments.
  • After a year of record land supply, but also record demand, the number of lots advertised for sale at the end of 2016 was 10 per cent less than the year before. At the end of December, developers had just 2.2 months of lot supply available for sale in the 1,200 estates surveyed.

Lot Prices

  • Nationally, the median advertised price for a land lot rose 10 per cent during the year to $287,000.
  • Sydney has the most expensive land, at a median advertised price of $465,000. The next most expensive lots are in Canberra and South East Queensland. Melbourne, where the median lot price is just $237,000 remains one of the nation's most affordable markets, despite an 11 per cent price hike in the past year.
  • Most affordable of all are lots in Adelaide, where the median price is just $166,000 and Perth where the median price dropped 8 per cent during the year to $229,000.

Lot Sizes

  • Nationally, the median lot size at the end of 2016 was 407 square metres which is 5 per cent less than the year before and 11 per cent below the median in December 2014.
  • The lot sizes were lowest in Perth, at 375 square metres, followed by Sydney at 396 square metres and Melbourne at 400 square metres. The largest lot sizes are in Canberra, where the median at the end of the last year was 534 square metres.
  • The reduction in lot sizes, coupled with the rises in lot prices, has delivered a significant increase in the price of land on a square metres basis. The national median price, at $602 a square metre, is 13 per cent higher than a year ago and 20 per cent higher than December 2014.

A number of recommendations are contained in the report, including for the Australian Government to retain the current negative gearing and capital gains regimes, as it is argued that any change would reduce new housing supply and in return deepen the housing supply and affordability crisis.

The Australian Government is also called on to fully fund and implement its 'Smart Cities Plan' and to invest in transport, health care, child care and housing.

It is recommended that state and local governments undertake major planning system reform to increase the supply of urban land and reduce delays and uncertainty associated with zoning, planning and the approvals processes.

State governments are also urged to move away from stamp duty on property transactions and replace it with more efficient broad base forms of taxation, and to remove foreign buyer and developer taxes and surcharges.

More information about the State of the Land Report is available from the Urban Development Institute of Australia website at <http://www.udia.com.au/>.

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