RECOVERING RESIDENTIAL MARKET
Written on the 1 December 2014
NEW house activity and lot production in Brisbane has entered the early stages of recovery, according to economic forecaster BIS Shrapnel.
The Outlook for Residential Land, 2014 to 2019 report shows lot production in 2013-14 increased to an estimated 6,000 from 4,700 lots the previous year.
These figures are still drastically below the 8,900 lots per annum produced on average in the prior 10 years to 2011-12.
The improvement in lot production in 2013-14 was underpinned by the emergence of pent up demand for new houses after the sustained period of low new dwelling activity following the GFC, says senior manager and report series author, Angie Zigomanis.
Cuts to interest rates have improved the affordability equation for Brisbane home buyers, while weak land prices over the last five years have also made new housing more attractive.
BIS Shrapnel predicts the increase in demand for land in Brisbane will continue to strengthen into 2014-15 and is anticipated to peak at 9,000 lots by next financial year.
The report also highlighted a deficiency of dwellings, with vacancy rates at June 2014 being a low 2.3 per cent.
In addition, it is believed net interstate migration into Queensland is expected to pick up with the strong price growth in the southern states encouraging some to move northward.
Gold Coast and Sunshine Coast markets have all experienced an extended period of weakness with the report stating only 600 lots were produced in each of the Gold Coast and Sunshine Coast markets in 2012-13, lower than at any level in at least the past 20 years.
This lack of new dwelling supply has resulted in an underlying deficiency of dwellings emerging in both markets in 2013-14, particularly for new houses, and we are seeing a recovery emerge, says Zigomanis.
Land production in 2013-14 increased to an estimated 1,475 lots on the Gold Coast and 950 lots on the Sunshine Coast.
In contrast, the demand for residential land in Sydney will continue to recover while lot production in Melbourne and Adelaide is likely to show only more moderate growth, while the market will turn down in Perth.