Australia appears to have been experiencing a 40-year land price boom, with the latest data showing sharp increases in land values ??across states and territories.
Figures from the Australian Bureau of Statistics showed that the estimated value of residential land in Australia rose from $4.9 billion to $6.6 billion in the 2021 financial year.
BuyersBuyers co-founder Pete Wargent says the rise in overall land values ??represents growth of more than a third, which is remarkable given the recessionary conditions caused by the pandemic .
“On the face of it, there has been a huge increase in the value of residential land, which has more than doubled over the past eight years,” he said.
"But it must also be recognized that more land is freed up and used for residential purposes as the population increases over time, so a good deal of the increase in value of land is integrated."
Mr. Wargent said the demand for residential land is "unusually" high in today's market.
"We expect further increases in land values ??and as a result single-detached homes are very likely to benefit from strong capital growth over the long term, in most established areas and landlocked suburbs of the country," he said. said.
Population growth stimulates demand for land
BuyersBuyers CEO Doron Peleg says Australia's growing population has been a key driver of rising land values, alongside structurally lower interest rates and rising of Australian household wealth.
"Take the state of New South Wales, where the estimated resident population has increased by around 3 million over the past four decades, while the average number of people per household has increased dramatically. decreased, creating a much greater demand for residential land,” he says.
"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."
This recent rise in land values, according to Mr. Peleg, has been driven primarily by coastal and lifestyle locations, on the backs of buyers using flexible work arrangements and seeking more space during for the past two years.
“We expect demand for land to remain strong, and land values ??are very likely to drive large price increases, especially in the long term,” he said.
Mr Wargent said a key element for long-term investors in land and property is the “survival” factor.
"Property will continue to go through cycles, but well-located residential land in cities like Sydney and the popular coastal suburbs of New South Wales will still be in high demand 40 years from now, hence its popularity sustainable," he says.
“However, you need to know where to buy, because not all properties on a large plot offer strong price appreciation; forward-looking vision and detailed analysis are required to identify the right opportunities in this highly competitive market. "
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Photo by @bendavisual on Unsplash.
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