Perth's land market is bracing for a significant price surge, according to industry experts, as the number of available lots has plummeted to historic lows. The Urban Development Institute of Australia (UDIA) Western Australia has issued a stark warning that the current market conditions are unsustainable and that prices are poised to rise sharply.
Record Low Supply Driving Prices
The UDIA's latest Land Supply Report reveals that the number of residential lots for sale in the Perth and Peel regions has fallen to its lowest level on record. As of June, there were just 2,100 lots available, a dramatic 65% drop from the five-year average of 6,000 lots. This scarcity is attributed to a combination of factors, including delays in land approvals, rising construction costs, and strong demand from both local buyers and interstate migrants.
Market 'Too Cheap' Says Expert
UDIA WA chief executive Tanya Steinbeck described the current land prices as 'too cheap' relative to the underlying demand and supply dynamics. 'We are seeing a market that is fundamentally undervalued,' she said. 'With such limited supply and ongoing demand, it is inevitable that prices will increase. The question is not if, but when and by how much.'
Steinbeck pointed out that the median lot price in Perth has remained relatively stable over the past year, at around $275,000, but this is expected to change as the supply crunch deepens. 'Developers are facing higher costs for land, materials, and labor, and these costs will eventually be passed on to buyers,' she added.
Impact on First Home Buyers
The looming price rise poses a significant challenge for first home buyers, who are already struggling with affordability. The UDIA report notes that the number of first home buyer grants in Western Australia has declined, suggesting that many are being priced out of the market. 'This is a worrying trend,' said Steinbeck. 'We need to ensure that there is adequate supply of affordable land to meet the needs of all buyers, particularly those entering the market for the first time.'
Calls for Government Action
The UDIA is urging the state government to take immediate action to boost land supply. Key recommendations include streamlining the approvals process, releasing more government-owned land for development, and investing in infrastructure to support new communities. 'Without intervention, we risk creating a housing crisis that will have long-term economic and social consequences,' Steinbeck warned.
The report also highlights the need for a coordinated approach between state and local governments to address planning bottlenecks. 'We have the land, but we need the political will to unlock it,' she said.
Outlook for the Market
Looking ahead, the UDIA predicts that land prices in Perth could rise by 10% to 15% over the next 12 months if current trends continue. This would bring the median lot price to around $300,000 to $315,000. While this may be good news for existing landowners and developers, it represents a significant barrier for new buyers.
The report concludes that the Perth land market is at a tipping point, and decisive action is needed to prevent a further escalation in prices. 'We have a window of opportunity to act,' said Steinbeck. 'If we fail to do so, the consequences will be felt for generations.'
