Unprecedented demand for land resulted in a record 76,100 lots selling in 2021, according to the latest State of the Land report. The Urban Development Industry of Australia (UDIA) report says land sales increased 33% last year. South East Queensland experienced a 31% increase in land sales with 17,160 sold in 2021. The report also shows that 20,420 new dwellings were completed in 2021 in SEQ, a 10% increase on the previous year. Stock levels remain at “critical lows” with only 85 active land estates for sale, which is about half of normal levels. The report predicts more homes will be completed in 2022 before a slow-down in 2023 and 2024. The unprecedented level of sales for land is a result of pent-up demand and the HomeBuilder scheme which resulted in a rush on land lots. This demand, coupled with a shortage in materials, has driven up the price of new homes significantly in the past year.
Gold Coast Units Prices To Explode
Gold Coast property prices are tipped to explode as the construction of new unit projects is delayed or cancelled. With materials and tradies hard to obtain, a number of developers are reconsidering their plans for 2022. There are five major towers under development on the Gold Coast, according to KM Sales and Marketing’s Jayde Pezet. Pezet says the rising costs are affecting the feasibility of projects which have not commenced yet and says there is a lot of speculation in the industry at the moment. “If there are issues that delay new projects coming to market, we believe this is going to create a situation where there is less stock on the market,” Pezet says. The market is already experiencing high demand from interstate migrants and the opening of international borders is expected to further increase demand. Knight Frank Research shows 216 properties on the Gold Coast sold for between $2 million and $7 million in the third quarter of 2021.
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“Given a dramatic tightening in vacancy rates, we are seeing an ongoing acceleration in weekly market rents across the capital cities.”
Louis Christopher, Managing Director of SQM Research
City Rents Rise As Vacancies Fall
Capital city rents continue to rise as vacancy rates fall further throughout Australia. SQM Research managing director Louis Christopher says vacancy rates in the smaller capital cities are below 1% and around 2% in Sydney and Melbourne. Vacancies are under 1% in most regional markets. Capital city average asking rents have increased to $627 per week for houses and $447 per week for units. This follows significant decreases in vacancy rates in all cities in the past month and over the past year. Christopher’s analysis found that Perth, Brisbane and Canberra had the largest increase in asking rents for houses during the four-week period. The latest increases mean asking rents have increased by 14% in the past 12 months for houses and by 8.5% for units. “Given a dramatic tightening in vacancy rates, we are seeing an ongoing acceleration in weekly market rents across the capital cities,” he says. “We can expect capital city rents to rise by over 10% in 2022.”
Cashed-Up Buyers Fire $10mil Sales
The number of houses sold for more than $10 million increased by 66% in 2021 on the back of huge demand from owner occupiers during the pandemic. Real estate economist Nerida Conisbee says 640 homes worth a total of $6.4 billion sold across Sydney, Melbourne, Brisbane, Adelaide and Perth. Sydney had the highest number of houses selling for more than $10 million with 478 properties sold in 2021, 70% higher than 2020. Melbourne recorded 100 sales worth $10 million or more, Brisbane had 34, Perth had 27 and Adelaide had one. Mosman in Sydney had the largest number of $10 million plus sales last year, with 50 transactions. “Sydney and Melbourne dominated the luxury sales tally, largely due to the size of the broader property market and higher median house price,” Conisbee says. “There is still no shortage of money at the higher end – the economy is growing quickly and international borders are now open again.”
East Coast Apartment Shortage Looms
A slow-down in development of new apartment buildings, plus a trades and materials shortage,could lead to an undersupply of apartments along Australia’s east coast. Market forecasts by Charter Keck Cramer on the Brisbane, Sydney and Melbourne markets predicts the number of apartments completed in 2024 will be about half of what is developed this year. It says this could result in a severe undersupply of new homes in two years’ time which will add further pressure to the rental market. Charter Keck Cramer’s Angie Zigomanis says overseas investors drove previous apartment building booms, but he does not believe there will be the same level of demand for investment even with international borders now open in Australia. He says investment will more likely come through institutional funding in the future. With vacancy rates at historic lows in many regions, the looming shortage of new apartments is expected to make it even tougher for renters to find and afford rental properties