Land Scarcity
A shortage of land is creating tremendous pressure on potential home buyers. Massive growth in population has created an overwhelming demand for accommodation that is not being supported.
The issue of dwindling supply of suitable land has caused fierce competition and is driving up prices to record highs. Many Australians now find that they are in the devastating position of not being able to afford to purchase a home.
Andrew Perkins, Research Manager of Oliver Hume stated that, ”Single-income households, which equate to around 15 per cent of all growth area buyers, cannot afford to enter the market.”
This scarcity of land is particularly prominent in Melbourne’s newer suburbs of Wyndham, Whittlesea, Casey and Melton. These suburbs experienced a dramatic growth to $212 750 in the previous 12 months. The increase in value was a staggering 24%.
A rise in land prices has occurred across all areas, from the cheaper suburbs to the more expensive regions. This has affected the values of land and housing considerably, driving up the average cost on the city fringe to $428 847.
With the consistent rising land values, there are fears that the median cost of purchasing land will soon overtake the median cost of building. The current gap between a block of land and the costs associated with constructing a house was only $3000. In 2006 the respective gap was $43 700.
Mr Perkins commented on this by saying, “land prices were likely to exceed the cost of building by the end of the year.”
Brian Welch, Chief Executive of Master Builders Association, expressed his concern on land scarcity and implied that the importance of the housing affordability crisis wasn’t being properly addressed.
He said, “The most basic thing, which is accommodation, is not given the attention that it deserves. Despite the urban growth boundary expansion, the state government failed to maintain an adequate buffer of land supply. It’s little surprise … we’re seeing an escalation in the price of land because there is too little available for sale.”
Liberal government planning spokesman, Matthew Guy, commented on the findings. ”The affordability question is the greatest challenge for Melbourne’s planning future,” he said.
Due to the high demands, from a growing population, the amount of available land is shrinking rapidly.
Melbourne suburb Mitchell, experienced a reduction in average land area by 54 square metres in the last 12 months. Similarly this occurred with Whittlesea by 29 square metres and Hume by 178 square metres.
Gill King, the executive director of Housing Industry Australia said, “The trend is that land lots will become smaller. This is a direct policy of government to reduce the size of land and property to create reasonable sized homes to detract from mansion type constructions. This is resulting in a greater demand for larger allotments across the state, which is conflicting with the scarcity of the land. Melbourne's housing market is certainly robust, it's no worse than Sydney.”
Simon Best, Director of Barry Plant Real estate commented, “Although the demand for land and homes was high, the supply was limited".To read the FULL story, please click on the TITLE
