Pressure on suppliers as Perth land market tightens
Western Australia's construction market is becoming extremely heated, as the latest report from the Urban Development Institute of Australia (UDIA) (WA Division) has highlighted land sales in the state are sitting at 40 per cent higher than the historical average.
Thirty developers in the region were surveyed about their activities in the recent months. The number of blocks in the Perth market fell by 9.7 per cent over the three months to September and 39 per cent over the last 12 months.
The demand for buying land in Western Australia has placed pressure on developers to bring forward planned stages, although the general trend is they're being bought as soon as they appear on the market.
"Land developers are fast-tracking land releases and brought 55 per cent more lots to the market compared to 12 months ago, but new stages brought to the market are selling quickly," said UDIA (WA) Chief Executive Officer Debra Goostrey in a November 27 statement.
There were 80 residential projects surveyed about their activity, which highlighted a huge 30.5 per cent more block sales than this time last year. Furthermore, the current level is almost twice the number of blocks sold two years ago.
September quarter sales in Perth were 43 per cent above the 10 year average, which highlights the pace of the current market, with demand for land in the region skyrocketing over the last few years.
In Perth, the most active region was Baldivis, which recorded twice as many vacant lot sales in 2013 as the next closest suburb, Harrisdale, and rose to a median land price of $189,000.
Ms Goostrey said the addition of new projects was expected to ease Perth's supply concerns, especially with the projected population growth expected to affect the nation in the coming years.
Research conducted by the UDIA found that developers are expecting to increase the number of lots available for sale in Perth over the next 12 months, with an estimated 23.2 per cent increase on June's level over the next six months.
Accordingly, housing approvals are also 50 per cent higher than they were 12 months ago, and are currently sitting at the same levels as the mid-2006 highs.
"The industry is doing its best to keep up the supply of lots and it is absolutely critical that the government does not introduce any further restrictions on the supply of land to the market if we are to avoid the price hikes that occurred last decade," said Ms Goostrey.