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Sydney’s residential land prices have fallen for the first time in two years in the December quarter, according to a recent report.
While the average Sydney land price was recorded at $450,000, the HIA-CoreLogic Residential Land Report revealed price fell by 6.3 per cent in the December quarter.
This contributed to a price drop at a national level of 2.3 per cent.
CoreLogic commercial research analyst Eliza Owen said the decline of Sydney land prices in two years reflected a culmination of several policies aimed at stemming demand for new residential development in the city.
“Combined with Australian limitations on foreign investment handed down in the 2016/17 budget, domestic banks are less willing to lend to individuals who source their income from overseas.
Related reading: Sydney Housing Market Has Slowed: Here’s How the Construction Pipeline Has Responded
“The sentiment among developers is that foreign investment in Australian residential dwellings is dwindling.
“Policies that have slowed domestic investor demand have been just as significant,” Owen said.
“The recommendation handed down by APRA in 2017, whereby interest-only loans would comprise no more than 30 per cent of mortgage originations, appears to have aided the downturn in Sydney.”
In contrast to Sydney's land prices, Melbourne prices have reached a new all-time high at $330,000, while Perth had the next most expensive average land price $269,000 followed by Brisbane on $232,500.
HIA senior economist Shane Garrett said the results also indicated that some of the largest land price increases have occurred in regional SA and Tasmania – markets that had been quiet up until recently.
Related reading: Australian Home Loan Approvals are Looking Up
Adelaide’s average land price of residential land was $220,000 and Hobart’s was $165,000.
Despite the findings, HIA have been unimpressed with the availability of residential land data.
“Australia’s long-term housing needs are impaired by poor reporting on the supply of new residential land,” Garrett said.
“Comprehensive and timely data is vital for driving better outcomes in this area. State governments need to publish more detailed figures about the volume of residential land in then supply pipeline so that Australia’s future housing needs have a better chance of being met.”
