Land scarcity in Australia will significantly dampen construction activity over the next two years, predict experts from CoreLogic and the Housing Industry Association (HIA).
HIA economist Angela Lillicrap said the recent surge in land prices indicates that supply could not keep pace with demand.
"In the year to September 2021, the median land price in Australia increased by 12.6% – the largest annual increase since 2006" , said Ms. Lillicrap.
Land price growth is more evident in capital markets
For example, land prices in the Greater Sydney area have increased by almost a third over the same period.
Overall, the median price of land in major capital cities combined increased by 14.7%, compared to the 8.6% growth recorded in regional areas.
"This suggests that the shortage of residential land is more severe in capital cities," said Ms Lillicrap.
“Land will be the biggest constraint on construction activity over the next two years. The current shortage of land will impact the industry at a time when the wider economy needs construction to help it move forward. »
Tim Lawless, head of research at CoreLogic, the spike in land prices is hardly a surprise, given the record level of single-family home approvals at the height of HomeBuilder and related constraints to the rapid bringing into line of newly subdivided land.
"What is more counterintuitive is the downward trend in land sales through 2021, a trend that is evident in each of the state capitals despite strong demand", Mr. Lawless said.
"Lower volumes reflect insufficient supply more than a lack of demand, which helps explain the sharp rise in land values ??at a time when the volume of land sales is declining."
BuyersBuyers CEO Doron Peleg said Australia's strong population growth is also a key factor affecting land demand and prices.
"Take the state of New South Wales, where the estimated resident population has grown by around 3 million over the past four decades, while the average number of people per household has increased dramatically. decreased, creating much greater demand for residential land,” Peleg said.
"Although population growth in the state slowed considerably during the pandemic, there was a very rapid increase beginning around 2006 during the mining boom years and beyond."
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