Capital city land prices soar – accelerating higher +10% | Pete Wargent

A lot of debate is happening in the “Twittersphere” about whether housing supply is relevant to Australia’s dwelling prices.

I’m not sure why people try to argue that’s it isn’t relevant, but anyway, my view is obviously that it is.

Without further ado, moving on to a release from the Housing Industry Association (HIA), and we can see that due to a lack of supply, Australia’s capital city land prices are soaring, with median lot prices in Australia accelerating higher over Q3 2014.

The HIA data showed that median lot values jumped by another 3.3 percent over Q3 2014 to a record high.

 

Gains all driven by capital cities

It is essential to note, however, that this acceleration in prices is not in any being driven by regional land prices, with median lot values increasing only marginally by 0.7 percent.

However, capital city land prices roared higher – going almost vertical – jumping by a massive 4.7 percent over the last quarter to record 10 percent growth over the past year alone to another all-time high.
Tim Lawless of Core-Logic RP Data noted that the decline in the number transactions does not bode well for dwelling approvals over the medium term, which sounds logical enough.

Accelerating prices are due to slow supply

In the words of the HIA:

“There are clearly pressures building in terms of the available residential land supply. city skylineAcute supply bottlenecks are affecting Australia’s residential land market.The number of transactions fell while price growth accelerated.Turnover decreased by 16.7 percent in the quarter while at the same time prices grew by 3.3 percent. These are the classic hallmarks of a market which is fast running into supply problems.The process of delivering new land supply and infrastructure is too slow and too expensive. Policymakers have to intervene to ensure Australia’s long term housing needs are met.”

Quite.



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Pete Wargent

About

Pete Wargent is a Chartered Accountant, Chartered Secretary and has a Financial Planning Diploma. He’s achieved financial freedom at the age of 33 - as detailed in his book ‘Get a Financial Grip – A Simple Plan for Financial Freedom’. Pete now manages his investment portfolio, travels and works as a consultant in the finance industry from time to time. Visit his blog


'Capital city land prices soar – accelerating higher +10% | Pete Wargent' have 3 comments

  1. February 21, 2015 @ 9:56 pm E Conveyancing Brisbane

    Actually, it is a great article. Quite helpful…Thanks…

    Reply

    • February 23, 2015 @ 6:21 am Karl Glode

      I can recall a 60+ lot subdivision Approval years ago shelved because the local council costs were almost the same as land sales value

      Reply


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