Vacant land prices grew in value and price across most capital cities over the past year, creating the impetus for greater growth in the cost of established housing stock.
• As at June 2016, the national median vacant land sales price was $212,000 and decreased by -2.3% over the past 12 months.
• The median vacant land sales price was recorded at $270,350 across the combined capital cities, and $164,250 for the combined regional areas.
• Combined capital city selling prices increased by 8.1% over the year while combined regional area sales prices fell by 1.9%.
• The median combined capital city vacant land selling price is now 65% higher than median prices in regional areas, the largest differential since September 2003 and the median size of residential land sales was recorded at 450sqm within the combined capital cities compared to 812sqm across the combined regional areas.
Although nationally median prices are lower, there has been a divergence between price growth across the capital city and regional markets.
The results show that the median land size has held reasonably steady (+0.4%) over the year across the capital cities and is 11.5% higher across the combined regional areas.
Capital city vacant land sizes reached a low point after remaining at current levels for some time while regional market land sizes experienced a small increase over the past year, and are now substantially larger than those within the capital cities.
CoreLogic reported that based on vacant land selling prices, and the size of the lots, the rate per square metre of vacant land as at June 2016 was recorded at $584 across the combined capital cities and $177 across the combined regional areas.
The rate per square metre for vacant land sold increased by 4.3% over the year across the combined capital cities and fell by -17.0% across the combined regional areas.
On a rate per square metre basis, capital city vacant land is now 231% more expensive than land outside of the capital cities which is the largest differential on record.
(Note: The adjacent statistics table details the key vacant land statistics across each of the state capital city markets. )
While it’s no surprise that the cost of vacant land in Sydney is significantly higher than in all other capital cities, of note is just how strong the increases in land prices have been in Sydney and Melbourne over the past year, with rises in excess of those for home values.
Excluding Hobart, each city currently shows a median lot size below 500sqm.
Interestingly, median lot sizes have increased over the past year in a number of capital cities including Sydney and Melbourne where median land prices have increased significantly.”
On a rate per square metre, housing costs have increased across each capital city over the past year.
Again Sydney and Melbourne recorded the greatest increases over the period.
A significant driver for the cost increases has been the price to purchase land.
Therefore, it’s no wonder median house prices in Sydney are hovering around $900,000 when new vacant land (most of which is on the outskirts of the city) has a median price in excess of $422,000.
An increase in the amount of land available for development, as well as lower fees and charges applied to land development, and more competition amongst developers would likely reduce land costs.
Potentially, this would slow the escalation in housing costs, particularly in Sydney and Melbourne.