Vacant land is one of the hottest commodities in residential real estate at the moment with some blocks increasing in value 45 per cent in just five months.
Herron Todd White’s Month in Review for September shows in the past 12 months south-western Sydney has seen extraordinary demand for traditional blocks of land, with one 559sq m site increasing in value $259,000 in less than 12 months.
Herron Todd White Director Shaun Thomas said the Denham Court block sold for $571,000 in December 2020 and then again for $830,000 in May 2021.
Similarly, a 449sq m block in Leppington sold in March 2020 for $445,000 and resold in July this year at a 69 per cent increase at $720,000.
“The past 12 months have seen an incredible demand for traditional blocks in south-western Sydney,” Mr Thomas said.
“It doesn’t feel that long ago that developers were offering incentives and rebates to entice prospective buyers.
“Today it is common to see buyers camped at the front of a sales office for weeks as they eagerly await a new land release, lucky dip-style ballots and exorbitant fees just to secure an inspection.
“Even with the current COVID pandemic, there doesn’t seem to be any slowing of demand with land values continuing to skyrocket.”
Mr Thomas said low loan serviceability, developers drip feeding the market, the State Government being slow to approve new land releases and increased demand from owner-occupiers were all factors driving the swift take-up of land.
He said the Western Sydney International Airport along with the Aerotropolis, which plans to bring a vibrant city to the west, was another key element making the area popular.
Quality rural lifestyle land is also seeing significant growth and demand in south-west Sydney, with cashed-up downsizers selling acreage, while the pandemic has also seen buyers flock to semi-rural areas for a change in lifestyle now that they can work from home.
“A 1000sq m vacant site in Austral sold in August 2019 for $750,000 and resold in June 2021 for $1.36 million, approximately an 81 per cent increase in little over two years,” Mr Thomas said.
In north-west Sydney there is strong demand for land in new subdivisions with increasing prices in established areas pushing buyers out.
Mr Thomas said a block of land at 3 Braeburn Cres, Bella Vista Waters, recently sold for $2.315 million.
“This reflects $3298 per square metre and is a record land sale for the suburb, and highlights the strength of this pocket for people wanting to build their dream home,” he said.
The outer western suburbs of Melbourne are currently inundated with land, with factors driving demand including government incentives, low interest rates and the attractive nature of existing multi-cultural communities.
Herron Todd White Director Perron King said local government areas to have a stockpile of land included Wyndham Vale and Melton, including suburbs such as Tarneit, Truganina and Weir Views.
“With what seems like an endless supply, Melbourne’s west has one of the largest development and growth potential areas in the country,” he said.
Between April 2020 and April 2021 CoreLogic recorded 954 vacant land sales for Tarneit with a $315,000 median price, while 726 blocks sold in Truganina with the same median price.
“A potential oversupply of land being developed could see prices decrease slightly over this time period, however demand for construction and new builds should counteract this should it happen,” Mr King said.
Herron Todd White Valuer Tahleah Williams said owning land was viewed as a “golden ticket” in Canberra, with new estates popping up regularly and additional stages being added to those already in existence.
She said areas such as Whitlam, Strathnairn, Taylor and Denman Prospect were developing popular greenfield sites, with the first residential block release in Whitlam in 2020 selling out in just days.
With vacant land in established areas incredibly scarce, Ms Williams said the number of knockdown-rebuild projects were on the rise.
“We have seen a rise in knockdown-rebuilds due to the government building incentives and also the demolition of Mr Fluffy sites, where the home contained loose-fill asbestos and therefore the removal of the dwelling was required,” she said.
“Overall, land in Canberra has proven to be a hot market for families and those looking to upsize.”
As national and international borders continue to open, Brisbane is expected to benefit from people looking to relocate.
Demand for traditional size blocks of land has been solid, particularly from first-home buyers and families who want to be close to new schools and amenities.
Herron Todd White Director Stuart Greensill said there was plenty of developable land available but the time it took to complete subdivisions and bring the blocks to market created tight stock levels.
“Spring Mountain has plenty of new land due to be released in the coming years,” he said.
“The estate’s last release of around 100 lots came to market just a couple of months ago and is already sold out.”
Mr Greensill said the pandemic had also “recharged” the demand for low-density living but stock was very limited, with most blocks being standalone as opposed to in an estate.
In Brisbane’s northern growth corridor vacant land is most popular in large master-planned communities, with 450sq m blocks in one estate in Caboolture rising from $235,000 in the existing stage up to $290,000 in the next stage to be released.
In Adelaide there has been a spike in demand for vacant land in the past 12 months due to low interest rates and the Home Builders Grant.
Herron Todd White Director Nick Smerdon said there has long been a tradition of residential development in Adelaide’s outer southern suburbs but more recently, with the construction of the Northern Connector, there has been a sharp increase in development in the north.
“Developments within these regions comprise greenfill-style sites with developers utilising transport corridors and existing community infrastructure where possible,” he said.
“With greater expanse of land available in these developments, we find a broader range in allotment sizes ranging from 150sq m to 1000sq m.
“Price points vary broadly from location to location with allotments ranging in price from $85,000 for townhouse lots to $300,000 for detached dwelling lots.”
Demand for land in established inner and middle ring suburbs has also climbed significantly and pushed prices skyward.
Traditionally, land in these areas would be between $400 and $700 per square metre but this has risen to $900 to $1200 per square metre.
In Perth the recent demand for land had been driven by the construction boom triggered by government stimulus.
“Perth’s love affair with building the dream home has resulted in continued urban sprawl throughout the four main corridors of the Perth metropolitan area,” Herron Todd White Director Chris Hinchliffe said.
Mr Hinchliffe said land take-up rates had been strong in the north-eastern corridor, particularly in Henley Brook where Mirvac’s Henley Brook Private Estate is close to being sold out.
Closer to the coast, new lots are coming to market in Scarborough, while plenty of first-home buyers are flocking to the growing suburb of Landsdale where lots range from 450sq m to 600sq m and are selling between $350,000 and $450,000.
“Along the Darling Scarp in Perth’s hills there is similarly strong demand for larger allotments that can provide a rural lifestyle and privacy from neighbours,” Mr Hinchliffe said.
Herron Todd White Director Terry Roth said there was no shortage of land in the Northern Territory with 5.4 square kilometres for each person in the state.
He said demand for land in the first half of 2021 had been strong, with government grants providing plenty of incentive to buy new and build.
“Demand has been strong in both the affordable sector and premium sector,” Mr Roth said.
“Zuccoli land releases have been targeted in the affordable dwelling market with the typical allotment selling for under $200,000 for a 450 to 500sq m allotment.
“The typical three or four-bedroom home in the suburb is selling for between $500,000 and $600,000 depending on the final finishes and improvements, showing great value for someone looking to get into the market and build their own home.”
Vacant land in Hobart is getting scarcer by the day but there are more releases on the horizon.
Herron Todd White Property Valuer Mark Davies said new subdivisions scheduled to have titles released in the next year were all almost accounted for, with backup contracts also in place if the current purchasers couldn’t secure finance.
“There are some punters out there signing the contract in their names or nominee in the hope the market will continue to rise and sell the block at an inflated price to another party contemporaneously on the date of settlement,” he said.
“But be careful, as if the nominee cannot complete the settlement you may be up for the purchase of the said lot, so have your finances ready just in case.”