Perth Land Costs Surge to Highest in Nation

22 October 2013

Prospective Perth homeowners are paying the highest price for a square metre of land in the country - but ending up with smaller blocks.Housing Industry Association figures showed a square metre of land in Perth cost $563 in the three months to the end of June.For the first time, on a square metre basis, Perth surpassed Sydney as the most expensive city. Perth's median lot price was $240,000, well short of Sydney's $280,000, but Perth blocks are smaller.
According to the HIA, Perth's median lot size was just 427sqm.
That was a 4.8 per cent fall in the quarter and 5.2 per cent down on a year ago as more people moved into semi-detached and multi-unit housing.
"The high level of prices in Sydney and Perth reflects strong demand and incomes in both markets, as well as strongly growing population," the survey found.
"Institutional factors also explain the high cost of land in both cities. The proportion of dwelling price accounted for by taxation is very high in both cities."
The release of shovel-ready land and the pace of planning and zoning in both cities has not kept pace with economic and population growth in either city."
The rise in prices and fall in block sizes came despite an overall reduction in residential lot sales in the quarter. Despite the 18.2 per cent quarterly fall, total sales were still 21.4 per cent higher than a year ago.
HIA chief economist Harley Dale said there was a distinct link between improving land sales and the number of detached housing starts. Nationally, the number of blocks sold in the June quarter was the best performance in almost three years.
Improvement in the housing sector has also shown up in home loans.
But mortgage broker Loan Market is recommending potential homebuyers get advice before fixing interest rates on their loan.
Director Mark De Martino said almost one in two mortgage inquiries with the business showed interest in fixing the rate.
Market analysts suggest the Reserve Bank is close to finishing rate cuts.
"Many homeowners and buyers mistakenly think the best time to fix your interest rate is just before they head up, when in reality the best time to fix your interest rate depends more on your personal circumstances than what the market is doing," Mr De Martino said.
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