Lot sales are important because lots sold will lead directly to a dwelling commencement and then completion. Despite the impact of a slowing WA economy, the lot market has exhibited initial signs of stabilisation, with the rate of decline in developer lot sales easing. The projected twelve-month lot production figures also fell at a slower pace. When coupled with a decline in stock on the market this indicates a more balanced supply equation.
In the Greater Perth area developer lot sales have levelled out considerably over the last three quarters falling 22% in the last 12 months but just 4% since March 2016. Similarly, projected lot production for the next twelve months is demonstrating significantly less fluctuation than previous quarters. The supply of lots is now coming more into line with lot demand, evidenced by substantial declines in the amount of stock on the market, down 20% from the previous year.
The average lot size increased to 388sqm for June 2016, up from a low of 370sqm in March 2016 and down from 404sqm in the June 2015 quarter. Figure 2 shows annual and quarterly changes in sales activity within 5 regions/corridors. With the exception of the South West metro region, sales activity has generally been in decline.
The Real Estate Institute of WA (REIWA) estimates that residential lot sales for WA during the year to September 2016 were down 35% to 8,497 from the prior year. During the same time period, estimated land sales for the Perth region, were down 36% to 6,258 whilst regional land sales were down by 33% to 2,239. In the September 2016 quarter, the preliminary median lot price in the Perth Metro Region was $285,000 which is likely to vary as additional settlements come through. The latest September quarter preliminary figure recorded an overall increase of 9% since last year and a quarterly increase of 11% based on the revised June 2016 quarterly figure of $255,000. In regional WA, the median land price has declined over the quarter by 3% to $173,000 but compared to the quarter ending September 2015, prices are still 2% higher.
Research from the HIA shows that Greater Perth continues to have the second highest median lot price of Australia’s major capital cities – behind only Sydney. Some HIFG members noted that the prevalence of rebates and incentives could be obfuscating the true lot price, as prices are reported without taking these into account. It was also noted that the relatively high lot prices in Perth are a constraint on affordability and building activity.
HIFG Report 2016-2017 (ref: 3.2). Undisclosed Writer/s, Department of Planning - Housing Industry Forecasting Group. Available from: https://www.planning.wa.gov.au/dop_pub_pdf/HIFG_Report_201617.pdf. [November 2016]
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