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Market recovery in sight 10/12/2016

While the property market remains relatively quiet, UDIA’s latest research represents moderate improvement in the new land sector during the September 2016 quarter.

While the property market remains relatively quiet, UDIA’s latest research represents moderate improvement in the new land sector during the September 2016 quarter.

According to the UDIA September Quarter Urban Development Index (UDI), the Greater Perth region recorded a slight 6.6 per cent increase in land sales activity over the quarter. While this remains 11.5 per cent lower than the 10-year average, it is a promising sign that the market may be improving.

The increase in sales activity has primarily been driven by areas of strong growth such as Rockingham, which recorded a 53.3 per cent increase in sales compared to the same time last year, and Cockburn, which increased 88.4 per cent after a weak sales period in the September 2015 quarter.

Despite a decline in land sales over the last couple of years, prices per square metre have remained relatively stable. In the September quarter, the average price of new land per square metre was $595. This equates to an average price of lots sold at $226,113.

In terms of what is going to be coming onto the market in the next 12 months, the number of lots currently under construction for release within a year has risen by 7.5 per cent to 4298 lots.

Given there is a surplus of stock on the market and more in the pipeline, the supply of land remains higher than demand, however this is expected to start to even out later in 2017.

The most lots under construction are located in the City of Armadale, where a number of existing developments are expecting new releases.

The City of Wanneroo, while experiencing a decline in construction activity during the September quarter, remains the second highest location for the number of lots under construction.

If you are seeking affordable land, the cheapest lots sold in the Perth Metro area were located in the City of Rockingham ($193,981) and Shire of Serpentine-Jarrahdale ($193,994).

On average, the priciest lots were located in the City of Joondalup, with an average price of $453,059 for lots sold, however this figure is based on only 18 lots’ sales.

Overall the figures represent a stabilisation of the land market in the Greater Perth region and a glimmer of hope that the market is starting to improve.

Once excess supply starts to be soaked up by the market in 2017, I would expect we will see further improvement in the land market by late 2017.

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