The latest residential land update signals that weakness in the new home building sector in Australia will persist throughout the remainder of 2012.
There was an improvement in land sales in the first quarter of the year but levels are still near a historical low, according to the latest HIA-RP Data Residential Land Report from the Housing Industry Association, the voice of Australia’s residential building industry.
Across the nation the volume of residential land sales rose by 6.8% in the March 2012 quarter, and are now up by 16.1% compared with the March 2011 quarter.
The weighted median residential land value in Australia increased by 1.5% in the quarter to $195,466, which is 0.8% higher compared to the same period in 2011.
The median value for capital cities increased by 2.6% to $222,458, some 3.5% higher than in the March 2011 quarter.
The median value for regional Australia was $154,232, a 1% reduction over the March 2012 quarter, and a 4.7% reduction compared with the same period in 2011.
‘The March quarter saw a 6.8% increase in land sales and it’s encouraging that the improvement was broadly-based across the states. With the exception of Adelaide, all the capital cities saw increases in the number of residential lots sold,’ said HIA senior Economist, Andrew Harvey.
‘However, the overall level of sales remains low in an historical context and we will need to see more quarters of growth to infer anything other than the possibility that sales volumes are merely bouncing along the bottom of a deep trough,’ he explained.
The new home building sector continues to face highly challenging business conditions and the prolonged period of weak land sales doesn’t provide any confidence that a recovery is on the near horizon. Meaningful reforms across all levels of government are urgently needed to address the persistent weakness in residential building,’ he added.
According to RP Data’s research director Tim Lawless, it is positive to see sales improving, although volumes remain well down on normal levels.
‘We have seen transactions for vacant land rise over two successive quarters now, however this lift comes from a historically low base. To put the number of land sales over the March quarter into perspective, transactions are about half of what we saw over the September quarter of 2009,’ he said.
‘Considering mortgage rates have moved about 55 basis points lower since March it is possible we may see a continuation in this trend of improving buyer activity but we have a long way to go before land sales get back to what might be described as normal levels,’ Lawless pointed out.
‘One of the barriers that may be stifling demand for vacant land is the fact that land prices haven’t seen any sort of correction like what was recorded across the established housing market. In fact, median land prices have risen by close to 1% over the year nationally and by 3.5% across the capital cities. Consumers are very budget conscious...
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