Further price growth in SEQ land market

DESPITE a slowdown in vacant land sales volume for the 2018 calendar year, the weighted average price for vacant land improved to $276,959, reflecting a 5.13 per cent increase from the corresponding 2017 calendar year, according to Ray White’s SEQ Vacant Land report*.

Ray White Special Projects QLD Executive Director Mark Creevey said the undersupplied development corridors including Brisbane City, Moreton Bay and Gold Coast witnessed the strongest price growth among the 10 local authorities from the year prior.

“The 2018 calendar year exhibited a clear slowdown in vacant land sales activity for the majority of the 10 local authorities that make up South East Queensland, with a total of 8,733 vacant lots sold, reflecting a 33.64 per cent fall from the 2017 calendar year,” he said.

“The fall in sales activity is primarily considered a result of macro prudential regulation in the financial markets.

“This remains the single largest factor influencing the market at present, with buyers stifled by reduced borrowing capacity, resulting from lower gearing requirements and greater scrutiny over serviceability by banks.

“We expect price growth through major growth corridors to remain a trend into the second half of 2019, as a result of thinning supply, the recent Federal Election result, the relaxation of regulations applied by APRA to the lending institutions and recent interest rate cuts.”

Ray White Special Projects QLD Executive Director Tony Williams said quality land supply remained the key challenge for South East Queensland in the short-to-medium term, with 2018 lot approvals down 22.26 per cent on the year prior.

“Notable reductions in future supply pipelines were observed for the Gold Coast, which saw lot approvals down 46 per cent, Logan City down 47.55 per cent and Moreton Bay seeing a drop of 33.95 per cent,” he said.

“The Redland Bay region exhibited strong results across the board with an increase in vacant lot sales of 7.02 per cent, while experiencing price growth of 14.10 per cent for the year.

“Future supply again appears to be the key challenge to the continued growth for the region, with lot approvals down 37.75 per cent for the year.

“Notwithstanding the recent reduction in land sales volumes, we’re confident in the general outlook for the land market in SEQ.

“Enquiry levels from locals and increasing numbers of interstate and even overseas groups are strong, with limited opportunities at present to acquire sites which offer scale, access to infrastructure, approvals or even a clear planning pathway to an approval.”

Ray White Special Projects QLD Executive Director Matthew Fritzsche said he anticipated a number of factors would continue to underpin the SEQ land market in the medium term.

“More affordable median land values between SEQ and southern markets still provides significant upside for southern buyers investing in SEQ,” he said.

“While continued population growth in SEQ is positive, it’s still well below peak numbers experienced in the early to mid-2000’s, highlighting the potential for further increases.

“Delivery and investment in major infrastructure projects such as Queen’s Wharf, Cross River Rail, Brisbane Metro, Brisbane Live, Brisbane Airport second runway and the potential SEQ 2032 Olympic Bid, will be key factors.

“Then there’s supply constraints through either geographic or fragmentation issues or delays in the planning process. This issue is likely to continue the trend of price growth in several key corridors where demand will outpace supply.”

Mr Creevey said he anticipated improving conditions across the land market throughout 2019 would increase momentum through the second half of the year.

“Rates of sale, whilst slower than in recent times, should improve and good quality sites will continue to attract strong competition,” he said.

*Ray White Commercial Research – SEQ Vacant Land – 2018 Calendar Year Report – June 2019.