Sydney land prices now rising faster than houses
More bad news for first home buyers as outer suburban land rush intensifies
Sydney’s median residential land price increased by 19.7 percent over 2014 and remains clearly the highest of all the state capitals according to the Domain Group.
The December quarter median land price of $390,000 was well ahead of Melbourne at $245,000 and Brisbane $237,950.
Sydney’s annual land prices increased at the fastest rate in over a decade and recorded stronger growth than booming house prices that increased by 14% over 2014.
Sydney’s outer suburban residential land market recorded strong growth over the year with prices in the south west increasing by 25 percent to a median of $350,000 and the west up by 8.3 percent to a median of $410,500.
The median residential land size sold in the west over the six months ending December was 564m2 at $759 per m2. In the south west, the median land size sold was 500m2 at $652 per m2.
The most popular outer west suburbs for land sales over the 6 months ending December 2014 were Riverstone, Colebee, Pitt Town, Kellyville and Glenmore Park. The most popular outer south west suburbs for land sales were Harrington Park, Campbelltown, Moorebank, Appin and Edmondson Park.
Kellyville recorded the highest median land price over the second half of 2014 at $643,000 with a median land size of 701m2 at $912 per m2. Land prices in Kellyville increased strongly by 38.2 percent over 2014.
With Sydney residential land prices now rising faster than booming house prices, the task for first home buyers is becoming increasingly difficult.
Despite recent changes to the NSW First Home Buyer’s Grant that provides a $15,000 subsidy for first home buyers buying a new property, the rate of growth of outer suburban land prices is continuing to push the great Australian dream out of the reach of entry level buyers.
It should also be noted that the First Home Buyers grant will reduce to $10,000 from January 2016 when on current trends outer suburban median land prices would have increased by at least another $40,000.
First home buyer market share in Sydney is set to remain at or near the current near record lows until chronic undersupply of residential development land in Sydney is effectively addressed.
TOP LAND SALES SYDNEY (6 months December 2014)
Dr Andrew Wilson is Domain Group Senior Economist Twitter@DocAndrewWilson