10 06 10 | APN Funds Management Ltd | Residential
Land shortage crisis in Melbourne
Land shortage crisis in Melbourne fringe as population expands and prices jump 25%
Melbourne’s land supply is reaching a crisis point with the availability of blocks dropping to a five year low, according to Oliver Hume Research.
At the same time, the population of the Growth Areas is increasing faster than predicted and is now expected to top one million, almost 25% of Melbourne’s total population, in just 18 months.
The research just released reveals how reducing land supply has accompanied price rises in Melbourne. Over the last four years, the median land price in the growth areas has risen 45% while supply - volume for sale - has fallen 72%, according to Oliver Hume.
Graphing land price against land supply in the growth areas shows a dramatic inverse correlation. (See graph attached.)
The median land price across growth areas rose from $125,000 in Q1 2006 to $181,500 at Q1 2010 – a 45% jump that coincides with land supply falling from almost 4000 available blocks to a record low of just 1126 blocks for sale in all growth areas at the end of April.
In 2006, growth area estates had an average 35 blocks for sale – at the end of April this year there were just 13 blocks per project. The number of estates on sale has also fallen, from 124 in 2006 to 87 estates on sale at the end of last quarter.
The worst affected region is Hume with an average of just nine lots available per estate while Melton has a relatively generous 26 lots available per estate. Casey estates have on average 12 blocks for sale compared to Cardinia with 13, Whittlesea 14 and Wyndham with 12 lots on average.
Oliver Hume national research manager Mr Andrew Perkins said the land shortage did not look like easing the short term. “We track several pressures on land price in the growth areas, including population growth, but reducing supply is probably the greatest single influence,” Mr Perkins said.
“The Victorian Government has recognized the need for more land in the Growth Areas - underpinning the urgency to delivery on identified growth area structure plans currently in the system “
The most recent State Government land assessment indicated that around 45% of available land is subject to a structure plan and as such is not available for development.
Recent demand is in the order of 15,000 lots per annum.
“ The 24,000 hectares announced recently by the Government will deliver in excess of 250,000 lots - but this land won’t be available for release until 2014-2015 ” Mr Perkins added.
The growth area population is predicted to reach one million people, almost 25% of Melbourne’s entire population in just 18 months and is growing faster than predicted, according to Oliver Hume. (Statistics based on ABS data. Additional information on growth area population is available.)
“More land may not necessarily mean lower prices in the future and with more than 1 million people due to be living in the growth areas by 2012 the demand for land is not likely to ease,” Mr Perkins said.
