Urban Development Institute of Australia’s State of the Land report shows Adelaide surging

A record number of housing blocks were sold across greater Adelaide last year but shortages have builders “working hard” to get houses on them.

A record number of housing blocks were sold across greater Adelaide last year but a lack of materials and labour is placing pressure on builders.

The continued impact of government stimulus and strong demand in the new housing market helped to fuel 5488 land sales in 2021, up 1571 on last year’s previous record of 3917 sales, according to the Urban Development Institute of Australia’s State of the Land report.

The 5488 lot sales was 130 per cent above the seven-year average while 5240 new homes were completed in 2020 - 14 per cent higher than the long-term average.

The UDIA predicts a “further uptick” of circa 6400 new homes will be built next year and “remaining at an elevated level for the next two years”.

Greenfield maps

“The sense of urgency in the Adelaide market comes from a combination of strong buyer demand and limited advertised supply,” the State of the Land report says.

“Adelaide has the pull of affordable rents and purchasing values, but relatively low

levels of supply, where total advertised stock remains about 44 per cent below the previous 5-year average.

“Though residential construction volumes are very high, the resulting labour and supply chain pressures are prolonging construction times and costs.”

Source: UDIA, CoreLogic

Artist's impressions of Villawood Properties master-planned development at Oakden. Supplied by Villawood Properties

It warns the development sector is “working hard” to replenish housing stock but says labour and material shortages, and delays due to rollout of the state’s “new planning system”, were putting the development sector under “significant stress”.

In the report research partner, Colin Keane of land supply consultant Research 4, says new land demand in 2022 was likely to “moderate in line with a broader post Covid correction, however forward demand is expected to be significantly higher than pre Covid levels”.

“Adelaide as a preferred destination has been highlighted across the 2021 year and is this new setting is likely to be re-enforced in 2022,” he says.

“From a supply side, the challenge will be to ensure that new supply gets to market in a timely fashion to mitigate any risk to affordability which may arise from a spike in demand.”

Adelaide accounted for 7 per cent of land sales nationally last year, up from a historic average of 5 per cent.

The UDIA research shows the median lot price has increased by $5000 to $187,000 but were still the nation’s most affordable.

The while the average block of land was 450 sqm, down from 458 sqm.