The HIA has released a new report this morning which offers a little more hope to the RBA’s new agenda of boosting dwelling construction. Land sales are showing a rising trend:
The latest residential land update signals that new housing starts should begin to recover modestly by early 2013.
“The June 2012 quarter saw residential land sales rise by 23.3 per cent to be up by 29.7 per cent when compared to the same period in 2011,” said HIA Chief Economist, Harley Dale.
“Growth is from a low base and the result is exaggerated by a policy-induced pull-forward in land sales in New South Wales and Victoria. Nevertheless, land sales did rise in all six state capitals and in a majority of regional areas and that is an encouraging result.”
“Residential land sales signal the prospect of a turnaround in new housing starts from the December 2012/March 2013 quarters, which has been HIA’s long-held forecast.”
“The recovery will be modest and the onus is on all levels of government to rectify the policy failures which considerably constrain new residential construction activity,” added Harley Dale. “Progress on this front is generally too slow or non-existent, yet you’d hope by now that governments are attune to the fact that interest rate cuts aren’t as effective as they were and it is government action that needs to be the leader not the follower.”
According to RP Data’s research director Tim Lawless, the improvements in vacant land markets have been consistent enough to call a trend, however it will be important to see how changes in State Government policy flow through to the market over coming quarters.
“These results represent the third consecutive quarter where land sales have shown an improvement – this further highlights that consumer sentiment towards housing is improving.”
“There were 15,255 vacant land sales over the June quarter this year, the highest number of sales recorded since the June quarter of 2010. Despite the uplift, land sales remained around 16 per cent below the decade average, highlighting that the improved conditions are coming from a low position.”
“While the number of land sales has increased across every state capital over the June quarter, the signifiant rise recorded in June can largely be attributed to an increase in activity across New South Wales where land sales were up 51 per cent, and in Victoria which recorded a 47 per cent surge in sales.”
“Changes in State Government policies have clearly drawn buyer demand forward, confirming just how sensitive the market can be to Government intervention. It will be interesting to see if the improved market conditions can be sustained over the September quarter, where after that time, some of the concessions will no longer be available,” Mr Lawless said.
In the June 2012 quarter the weighted median residential land value in Australia eased by 0.3 per cent to $192,828. This value is 1.7 per cent higher when compared to the same period in 2011. The median value for capital cities eased by 0.6 per cent in the June 2012 quarter to $218,197, 3.1 per cent higher than in the June 2011 quarter. The median value for Regional Australia was $154,080. This represents a bare 0.1 per cent tick up over the June 2012 quarter, and a 1.3 per cent reduction compared with the same period in 2011.
David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal.
He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.
