{"id":3755,"date":"2015-03-09T01:00:14","date_gmt":"2015-03-08T14:00:14","guid":{"rendered":"http:\/\/realestatetalk.com.au\/?p=3755"},"modified":"2015-03-09T01:00:14","modified_gmt":"2015-03-08T14:00:14","slug":"land-prices-in-sydney-are-growing-faster-than-house-prices","status":"publish","type":"post","link":"https:\/\/channels.realty.com.au\/realtytalk\/land-prices-in-sydney-are-growing-faster-than-house-prices\/","title":{"rendered":"Land prices in Sydney are growing faster than house prices"},"content":{"rendered":"

 
\nOn today’s show,\u00a0Andrew Wilson<\/b>\u00a0tells us that right now land prices in Sydney are growing faster than house prices, so hold onto your hat in that market.
\n<\/b>
\n <\/p>\n

Read the transcript here:<\/h4>\n

Kevin<\/b>:\u00a0 When we talk about real estate prices, we sometimes forget that it really rides very much on the value of land. It\u2019s interesting to see that there is a report out by Dr. Andrew Wilson, who is the chief economist for The Domain Group, saying that Sydney land prices<\/a> are now rising faster than houses.
\nHe joins me. Andrew, what do you read into that situation?
\nAndrew<\/b>:\u00a0 It really does crystallize that underlying shortage of land in Sydney, Kevin, which is a key catalyst for driving prices over the last decade really and creates\u00a0<\/b>that underlying pressure for prices growth that really seems to show no end.
\nOur latest report shows that Sydney land prices rose by just under 20% over 2014, which was higher than the 14% reported for house prices over the same period. Certainly very scarce on the ground land in Sydney and plenty of demand.
\nWe\u2019ve seen some of those outer Western Hills areas of Sydney prices growth. In Kellyville, for example, up by nearly 40% over 2014. That\u2019s a real extraordinary rise in prices. When we look at the medians out that way. Kellyville has a median land price of nearly $650,000, which by the time you put a house on a block of land with that value, you really don\u2019t get much change out of $1 million.
\nI think this does reflect that the buyers for vacant blocks of land in Sydney are really coming from changeover buyers who are either looking to change up in their local areas or are moving out from the inner suburbs of Sydney looking for, I guess, that semi-green change type of lifestyle in the outer suburbs.
\nWhat this means, of course, is that first time buyers have another competitor in the marketplace. Those entry-level buyers have typically looked, over the generations, for fringe house and land packages as their entry point into the housing market, but now they\u2019re competing with changeover buyers who are pushing prices up very strongly in that Sydney outer fringe.
\nKevin<\/b>:\u00a0 Certainly to say, not good news for first-home buyers. What impact will it have on established homes sales?
\nAndrew<\/b>:\u00a0 It\u2019s just offering another variety, another neighborhood characteristic. It means that not everybody wants to live closer to the CDD, not everybody wants an apartment, not everybody wants to live in an established middle ring suburb, that there is still solid demand for new homes in the outer suburban areas from changeover buyers, and they\u2019re prepared to pay money for it.
\nThe real issue in Sydney is there is just a shortage of land. It\u2019s not just about land releases from the authorities; it\u2019s about the geographical constraints \u2013 the Blue Mountains to the west, the Pacific Ocean to the east, the Hawkesbury River to the north, the national park to the southeast. It means that land can really only funnel down to the southwest.
\nThat means that new estates are now 70 or 80 Ks from the CDD and it\u2019s difficult to develop. The costs of new infrastructure in those areas is significant and it\u2019s really a problem for Sydney in terms of keeping a cap on what is the strongest prices growth in the country.
\nKevin<\/b>:\u00a0 Just moving out of that Sydney market, what about other cap city markets \u2013 Brisbane, Perth, those areas? What\u2019s it like there?
\nAndrew<\/b>:\u00a0 We\u2019ve seen strong prices growth in Melbourne and Perth, as well. Those markets \u2013 both Melbourne and Perth \u2013 are attracting still reasonable numbers of first-home buyers out to the fringe. They have a different geographical profile. Melbourne can spread to the north, to the west, and down to the southeast so it has plenty of broad acre capacity there for new house and land packages.
\nFirst-home buyers are still quite active in those areas. That Sydney median land price last year was $319,000 which was clearly the highest of all the capitals. When we look at Melbourne and Brisbane, they were down under $250,000. Perth was up around $300,000.
\nBut that Perth housing market is also supplying a lot of properties for first-home buyers. Perth has the highest proportion of first-home buyer activity of all the capital cities, and a lot of them are buying on the fringe. Some good news there, I guess, for first-home buyers; they\u2019re still competing in the marketplace, but not so much good news with prices rising strongly.
\nBut in the Brisbane market, land prices were up by around 4% last year, which was under that 6% growth that house prices increased by in Brisbane. A lot of that land sales activity was happening to the north of Brisbane, out in that North Lakes\u00a0<\/b>area, which is proving very popular with first-home buyers.
\nI think that shows that that Brisbane house and land package market, particularly directed towards first- home buyers is still resonating and still providing some balance. I think that\u2019s a good news story going forth for first-home buyers looking to get into a new property to start their journey on the property ladder.
\nKevin<\/b>:\u00a0 What about land size? Does that impact this. If you look at square meterage and what we\u2019re paying per square meter in those cap cities, does that vary much?
\nAndrew<\/b>:\u00a0 The other thing, of course, Kevin, is that I guess over the years, we\u2019ve seen land sizes fall. The notion of the quarter-acre block really has fallen away. Blocks can vary from as low as 200 square meters in size, but most blocks in capital cities are averaging around 500 to 600 square meters in size. When you start looking at the \u201cbang for the buck\u201d you get per square meter, it can vary considerably.
\nBut overall, I think that there has been a move to more inside living rather than outside living. Whether that\u2019s been a price-driven outcome, people really are moving away from the sense of a backyard. There are lower offsets from the neighbors and also from the frontage offset, and certainly smaller backyards, with people with resident homebuyers looking now more for an internal lifestyle rather than that external lifestyle.
\nOf course, that suits developers in the sense that they can provide smaller lots and still keep the number of houses supplied at reasonable levels.
\nKevin<\/b>:\u00a0 I think Michael Yardney sums it up nicely. He says, \u201cPeople are trading backyards for balconies.\u201d That pretty much sums it up, I reckon.
\nAndrew<\/b>:\u00a0 That\u2019s right. I suppose that\u2019s all a part of technological change, as well, and more efficient floor plans. This is a positive thing. Also, recreation is now becoming something that is a community-provided recreation rather than something that you provide within your own family group or neighborhood group, in a sense. That, once again, eschews, I guess you\u2019d say, the need for a backyard.
\nKevin<\/b>:\u00a0 Always good talking to you. Dr. Andrew Wilson is chief economist with The Domain Group. You can see Andrew\u2019s blog site and also check out The Wilson Curve at DoctorAndrewWilson.blogspot.com.au.
\nAndrew, thanks for your time.
\nAndrew<\/b>:\u00a0 My pleasure, Kevin.<\/p>\n","protected":false},"excerpt":{"rendered":"

  On today’s show,\u00a0Andrew Wilson\u00a0tells us that right now land prices in Sydney are growing faster than house prices, so hold onto your hat in that market.   Read the transcript here: Kevin:\u00a0 When we talk about real estate prices, we sometimes forget that it…<\/p>\n","protected":false},"author":176692471,"featured_media":3756,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_feature_clip_id":0,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_post_was_ever_published":false},"categories":[10,25],"tags":[101],"class_list":["post-3755","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-kevin-turner-sponsored-channels","category-sponsored-channels","tag-podcast"],"yoast_head":"\nLand prices in Sydney are growing faster than house prices - 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