01 Dec Residential land demand on rise
DEMAND in residential land is set to remain strong in Sydney next year, with a recovery in land sales picking up pace in Brisbane, the Gold Coast and the Sunshine Coast.
But land sales in Melbourne and Adelaide will slow, according to forecaster BIS Shrapnel’s residential outlook.
Researcher Angie Zigomanis said a decade of weakness in Sydney’s land market had set up demand for a number of years.
“The peak in land prices in 2004-05 meant that a significant premium had to be paid to buy a new house compared to the cost of an established home,” Mr Zigomanis said.
About 5500 new lots are estimated to have been completed this year, with BIS Shrapnel forecasting the completion of 8100 lots each year for the next five years.
Demand for land in Melbourne and Adelaide is expected to show moderate growth in 2015 because there is not the same level of pent-up demand as in Sydney and south-eastern Queensland.
The report found that pressure on land prices had meant developers have been producing smaller lots on average, with increased densities allowing developers “to account for increasing costs”.
“Median lot sizes have shrunk by between 16 per cent and 28 per cent across the capital cities over the past decade,” Mr Zigomanis said. “Developers have tried to keep headline lot prices lower in order to keep the cost of a new house competitive with the existing stock in the outer fringe suburbs, thereby encouraging demand for land.”
Acknowledgement: Story by Kylar Loussikian From: The Australian