A key housing construction group in Australia has hailed reports of a sharp increase in vacant residential land sales, saying the latest figures show that a modest recovery in housing starts will take place over the coming months.
The Housing Industry Association (HIA) says the latest HIA – RP Data Residential Land Report shows a significant increase in residential land sales in the June quarter, which it says provides a signal that a modest recovery should take hold by early 2013.
“The June 2012 quarter saw residential land sales rise by 23.3 per cent to be up by 29.7 per cent when compared to the same period in 2011,” HIA chief economist Harley Dale says. “Growth is from a low base and the result is exaggerated by a policy-induced pull-forward in land sales in New South Wales and Victoria. Nevertheless, land sales did rise in all six state capitals and in a majority of regional areas and that is an encouraging result.”
“Residential land sales signal the prospect of a turnaround in new housing starts from the December 2012/March 2013 quarters, which has been HIA’s long-held forecast.”
But Dale cautions that any recovery will be modest, and that further action was needed by governments at all levels to rectify ‘policy failures’ which he says constrain new residential construction activity.
“Progress on this front is generally too slow or non-existent, yet you’d hope by now that governments are attune to the fact that interest rate cuts aren’t as effective as they were and it is government action that needs to be the leader not the follower,” Dale says.
RP Data research director Tim Lawless has welcomed the latest figures, saying improvements in vacant land markets have been consistent enough that they could be called a trend.
Lawless cautions, however, that improved conditions in this area may not be sustained during the September quarter following the end of home building concessions in June in Victoria and New South Wales.
Despite the increase in sales volumes, the results showed an easing of the weighted mean residential land value to $192,828. The most expensive region was the Sunshine Coast in Queensland, while the least expensive region was the Mallee in Victoria.
The latest figures are the first significant sign of good news in the housing industry for a long time. Data relating to new home sales and building approvals earlier this month indicated that for now, at least, residential building conditions throughout Australia remain weak.