Sales of residential land continue to rise despite a drop in the September 2012 quarter, according to the latest HIA-RP Data Residential Land Report.
Residential land sales fell by 17.8 per cent in the September 2012 quarter, but the volume was still 14.9 per cent higher than the record low set a year earlier.
HIA Chief Economist, Harley Dale said that while it is encouraging to see land sales in a majority of markets lifting off the depths plunged in 2011, the volatility shows there is a long way to go.
“Overall, residential land sales - a key leading indicator of housing starts - signal a rocky road for any new home building recovery in 2013”, Dale said.
“One catalyst for the emergence of a strong new home building recovery would be the reduction in the cost of new housing, including serviceable land”, he added.
RP Data’s research director Tim Lawless agreed that the September results show the recovery in the vacant land market remains a fragile one.
“After consistent increases in the number of vacant land sales over the past three quarters, the lower September result is a stark reminder that consumers remain very price sensitive and cautious about their household finances”, Lawless said.
“Land developers and builders are facing the challenge of providing affordable house and land packages at a time when land costs, as well as construction costs, continue to rise.
“The median price of a vacant block of land rose 3.8 per cent over the September quarter last year despite the fall away in volume.”
“The broader housing market remains on a recovery trajectory, and I would be surprised if the vacant land market continued the slippage in transaction numbers we saw in September”, he concluded.
In the September 2012 quarter the weighted median residential land value in Australia increased by 3.8 per cent to $197,807. This value was 4.2 per cent higher when compared to the same period in 2011.
The median value for capital cities increased by 5.1 per cent in the September 2012 quarter to $225,795, 6.0 per cent higher than in the September 2011 quarter.
The median value for Regional Australia was $155,214 in the September 2012 quarter. This represents a quarterly rise of 0.8 per cent and a 0.2 per cent increase compared with the same period in 2011.