Greenfield Sector’s 33pc Sales Surge Drains Pipeline
Unprecedented levels of demand for new greenfield land pushed lot sales across Australia up by a third in 2021.
The latest UDIA report, prepared alongside Corelogic and Research4, shows a record-breaking 76,100 lots sold across the combined capital cities last year.
The demand has been fuelled by an influx of buyers from the inner and middle city suburbs, with the success of HomeBuilder adding fuel to the fire.
Melbourne, the country’s biggest residential land market, accounted for nearly half of the sales activity with 33,700 sold across the year, up 125 per cent on the previous year.
The surge, propelled by buyers leaving lockdown conditions in search of larger blocks and detached dwellings, pushed Melbourne’s lot prices up by 8 per cent to $327,000.
South-east Queensland, Australia’s population magnet throughout the pandemic, experienced a 31 per cent increase in lot sales, strengthening prices by 9 per cent.
The Brisbane and Gold Coast regions, which continue to benefit from the severe under-supply situation in Sydney and influx of Melbourne buyers, also registered the first meaningful price rise in more than a decade, gaining 5 per cent to $272,000.
Adelaide also enjoyed a significant bump in lot sales across the year to lift prices by 4 per cent.
Sydney was the only market with a significant increase in lot pricing and uplift in median land prices, climbing 14 per cent to $544,000.
Sydney’s greenfield market recorded a slight 3 per cent increase in annual land sales, 9200 lots, with the bulk sold in the June quarter—the highest quarterly result in six years.
A critical lack of active supply drove a 50 per cent drop in sales volumes in the second half of 2021 after record sales volumes were recorded in the first half of last year.
Perth’s difficult land market, traditionally hampered by a soft job market and low population growth, managed 8300 lot sales over the year—down 22 per cent on the prior year, as the state remained shuttered for most of the year. Canberra’s market was also depressed, down 14 per cent.
UDIA president Maxwell Shifman said the frenetic performance of the national greenfield sector had been a critical component of Australia’s strong economic performance through the pandemic.
“While this has been great news for market confidence and strengthened a housing-led economic recovery, it is also a warning for governments for the need to act now to ensure development-ready supply is brought online,” Shifman said.
UDIA is now projecting a modest aggregate lift in overall production of combined capital city new residential supply to be delivered in 2022 to total 99,200, remaining at a similar production level in 2023 before declining to 94,600 in 2024.
Research4 managing director Colin Keane said 2022 would need to see a moderation in demand in order to allow the market to “re-group” and “re-stock”.
“Last year was an all-out assault on the greenfield supply lines with most markets ending the year with depleted levels of active supply,” Keane said.
“If 2022 is a continuation of 2021 in terms of activity levels, then the impact will be a widespread loss of housing affordability.”
Keane said supply was expected to dip 27 per cent by the end of the year to be 7 per cent below the eight-year average achieved between 2013 and 2021.