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Weak home building becoming weaker

Latest residential land updates signal persistent weakness in new home building in 2012 . The HIA-RP Data Residential Land Report provided by the Housing Industry Association and RP Data showed land sales hitting a new low and median land values rising further in the December 2011 quarter.

“The volume of residential land sales has been below the previous trough set during the GFC for five consecutive quarters now,” said Harley Dale, HIA Chief Economist.

“Over the five quarters to December last year land sales ran at a volume 40 per cent lower than their long term average. This situation points to there being no discernable recovery on the horizon for new home building, further highlighting that current policy settings in Australia are inappropriate.”

According to Mr Dale Australia interest rates are too high, plans for concretionary fiscal policy untimely and too tight, state housing reform too slow, and cooperative reform efforts across levels of government too difficult to find.

The volume of residential land sales fell by 27 per cent over the year to the December 2011 quarter. The weighted median residential land value in Australia increased by 1.7 per cent in the December 2011 quarter to be 0.7 per cent higher when compared with the December 2010 quarter.

The median value for capital cities increased by 2.8 per cent in the December 2011 quarter to $219,001, 1.5 per cent higher than one year earlier. The median value for Regional Australia fell by 0.7 per cent in the December 2011 quarter to $153,833, to be down by 1.0 per cent on the December 2010 quarter.

RP Data’s research director Tim Lawless believes conditions in the vacant land market are the weakest in more than a decade.

“Over the 2011 calendar year we have seen just under 44,000 land sales which is 46 per cent lower than what was recorded over the 2009 calendar year. Compare that to the dwelling market where transaction volumes are about 28 per cent lower compared with the 2009 highs, which is a weak result in itself, and the significant weakness in the vacant land market becomes even more apparent,” said Mr Lawless.