Residential land sales have hit their lowest level in a decade, according to the latest figures from the Housing Industry Association (HIA) and RP Data.
The HIA-rpdata.com Residential Land Report found the volume of land sales fell by 40.4% during the December 2010 quarter when compared to the same period in 2009.
“Land sales are a reasonable lead indicator for future supply additions to the market, and a 40% reduction in land sales points to ongoing weakness in the housing construction sector which is already very soft,” said RP Data research director Tim Lawless.
“While land sales continue to fall the price of land continues to rise. This divergence illustrates the imbalance between supply and demand. A lower number of sales would often suggest demand is drying up, however with land prices continuing to rise the fall away in land transactions is clearly supply related.”
Despite the drop in land sales, the weighted median land value rose by 4.1% over the quarter to reach $194,161, putting its annual growth for 2010 at 5.9%.
“The escalation in land values highlights an ongoing deterioration in new home affordability driven by constraints on supply,” said HIA economist, Matthew King. “The sharp drop in the volume of land sales signals a very weak 2011 for new home building.”
“Quite apart from the considerable damage wrought by the interest rate hikes of last November, new housing continues to sag under the weight of the excessive cost of serviceable land.”
“Put together planning and zoning delays, high regulatory costs, deficient land release strategies, disproportionately high taxation, user pays infrastructure charges, and an on-going credit squeeze, and you have a recipe for crippling land values.”
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