New residential land prices in South East Queensland (SEQ) have increased by nearly 80 per cent over the last 10 years on a per square metre basis, according to analysis by property services group, Oliver Hume. This increase represents some of the strongest returns from any investment class over the past 10 years, the group claims.
“If you had acquired an average block of land at a new development in 2006 the same block of land now would probably fetch more than $330,000. The large blocks that were being sold back then are extremely rare these days and would probably attract a healthy premium on top of that,” said Oliver Hume Joint Managing Director, Brinton Keath.
Smaller lot sizes and rising lot prices are now key features of the east coast land market. Developers have been creating smaller lots to offer more affordable house and land product, while also introducing townhouses and apartments into the middle and outer suburbs.
“As the cost of development has increased over the last 10 years because of things like infrastructure charges, englobo land price increases, construction costs and red and green tape, the size of lots have had to come down to maintain affordability.
“There is also increasing demand for smaller blocks which are lower maintenance,” said Keath.
The research also showed prices for residential land in the south east increased about 6 per cent throughout 2016. Keath attributes this pace of growth to low levels of supply, with limited new land coming on to the market.
“Prices will continue to rise while there is such a shortage of new land coming on to the market. Unless governments at all levels can find ways to release more land for sale, prices will continue to rise at above inflation,” he said.
Despite the significant growth, Mr Keath said that Oliver Hume still considered South East Queensland one of the most balanced land markets in the country with limited risk that prices will drop.
“We expect similar levels of growth in 2017 with the Gold Coast, which is experiencing a major shortfall in new land, set to experience the strongest growth,” he said.
“This research comes as no surprise to us,” said Ironfish National Housing Manager, Josh Ure. “It reflects our own experience in the South East Queensland market, where we have seen land prices increase over the past three years especially.
“During the same time period, the average land sizes are getting smaller. Ten years ago, a 600m2 block of land was considered to be the average size. The “new normal” land size now 375m2 on average in our view. Blocks of land over 400m2 are getting very hard to source for our clients,” he said.