Blocks for sale shrink while prices soar past $300,000 in Perth

New land prices in Perth are the highest since the 2007 economic boom, threatening Perth’s mantle as one of the most affordable capital cities in Australia.

New data from the Urban Development Institute of Australia of WA showed the average price of a new block of land in the metropolitan area is now $305,177 and prices are on an upward trajectory.

That figure is the highest average price recorded since 2007, when the average price hit $317,000 at the peak of that boom.

UDIA chief executive Tanya Steinbeck said the high sales volumes and lack of housing supply in the forward pipeline was having a knock-on impact on the new land market.

According to the Urban Development Index, the number of sales during the June quarter increased 54 per cent on the same quarter last year, and the number of lots on the market is down 71 per cent.

“While the established market has experienced significant price escalation since 2020, the new house and land market has managed to retain a level of price stability,” she said.

“That is all starting to change with a 9.5 per cent lift in the average price of land this quarter, and that is a 25 per cent lift year,” she said.

Like in 2007, when the economic boom was in full swing, the price hikes are attributable to a supply shortage of new land for housing across Perth and the regions.

While UDIA WA’s figures show that construction activity has lifted this quarter, the increased activity is not sustainable, according to Steinbeck.

“We know that developers are struggling to keep up with demand, and they just don’t have the depth in their forward pipeline to keep construction up to the current levels, or indeed to increase construction levels further, which is what the market really needs,” she said.

Urbis Director David Cresp said the forward pipeline indicated more pain to come for Perth’s new land market, as well as in the apartment sector, where there has been very little activity in recent years.

“Whilst 2024 will see the highest year of apartment completions that we have seen for some time, with 2,566 apartments forecast to be completed, the forward supply pipeline is at much lower levels,” he said.

“In the first six months of 2024, only 661 apartments commenced construction in developments of 25 or more apartments.

“This compares to an average year between 2014 and 2022 where almost 2,000 apartments were commencing construction each year.”

Cresp said construction costs meant apartments were only financially viable in the more premium areas of the city.

UDIA WA will launch a state election campaign next Friday, outlining a set of priorities for the next state government to work collaboratively with industry on to get more homes on the ground faster.

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