Land shortage fuels house block price rises

The cost of buying a block of residential land soared on the Central Coast in the June quarter while at the same time the number of sales fell considerably, a new report shows.

Housing Industry Association (HIA) Hunter Executive Director, Craig Jennion, said the latest HIA-CoreLogic Residential Land Report shows that compared to the March 2021 quarter the number of residential land sales in the June quarter decreased by 49.27 per cent on the Coast.

By comparison, sales fell by 42.38 per cent in Newcastle and Lake Macquarie and 16.5 per cent in the Hunter Valley.

“This data, combined with an increase in land prices, reflects a shortage of land following the surge in demand after the announcement of HomeBuilder last year,” Jennion said.

“The median lot price on the Central Coast in the June quarter was $380,000, a 9.35 per cent increase over the previous quarter.”

Newcastle and Lake Macquarie saw a 18.57 per cent increase while the Hunter Valley saw a 0.46 per cent fall.

“The median lot prices however do not account for differences in the characteristics of the lots being traded, such as their size,” Jennion said.

“As a result, a more appropriate approach is to use price per square metre to track land value.

“The median price per square metre for the Central Coast was $790, an increase of 4.22 per cent from the March quarter.

“The median price per square metre for Newcastle and Lake Macquarie was $764, an increase of 30.15 per cent from the March quarter.

“All locations remain affordable in comparison to Sydney, the most expensive capital city in the country, which recorded a median square metre price of $1,412.”

The report also found that the Central Coast has the eighth smallest median lot size of regional areas at 519 square metres during the March quarter.

In contrast, the median block size coming to market in Newcastle and Lake Macquarie was 570 square metres and 604 square metres in the Hunter Valley.

“The significant reduction in sales and an increase in price for residential land has not just occurred on the Central Coast and in the Hunter,” Jennion said.

“We have seen the median price in Greater Sydney increase by 11 per cent and the number of sales fall 48.28 per cent in the June quarter.

“The process of turning a paddock into ‘shovel ready’ land can take over a decade in Australia.

“As a result, it is difficult for land supply to respond to changes in the short term and we are starting to see the impact of this with the increase in prices.”

Primary information source: Housing Industry Association Hunter and HIA-CoreLogic Residential Land Report