BIS Shrapnel’s Outlook for Residential Land, 2014 to 2019 report has forecast that Sydney’s upturn will continue but the big performers appear to be Queensland’s Brisbane, Gold Coast and Sunshine Coast. Perth is, however, expecting a downturn over the period.

Sydney’s sales rate in the outer suburbs is notable for being close to its early-2000s level, explains BIS Shrapnel’s senior manager and report author Angie Zigomanis. Despite the increase in sales there has been an extended downturn in Sydney’s land market resulting in a continued shortfall in new housing.

The markets in Brisbane, Gold Coast and the Sunshine Coast can be looked at more as a recovery after extended weakness, with new house and land packages looking affordable relative to established houses with minimal upwards movement for land prices.

Melbourne and Adelaide are forecast to see growth, at a moderate pace, over 2015 – even in the low interest rate environment – with healthy levels of new house building seen in both.

“Demand for land in both the Melbourne and Adelaide markets is showing some increase, underpinned by low interest rates,” said Zigomanis.

“In Melbourne, lot production bottomed out in 2013/14 after the land market was oversupplied due to new subdivisions coming online following the market peaking in 2009/10. As a result, the stock of completed lots had to be progressively sold down before the next round of development could occur,” he said, noting that any excess has now been absorbed by an uptick in land demand, rising prices and low interest rates with sell outs in estates and off the plan sales common.

“Adelaide experienced mild growth in lot production in 2013/14, with low interest rates and limited price growth improving affordability and encouraging greater demand for land. However, the upside is more limited, with slower population growth expected, resulting in milder growth in demand for new dwellings in general. The market is also being impacted by the removal of the Housing Construction Grant at the end of 2013,” he said.

Brisbane – Entered early stages of recovery

Early recovery phase entered in 2013/2014, as lot production rises from 4,700 lots in 2012/2013 to 6,000 lots, though it remains below 8,900 lots per annum produced in the 10 years to 2011/2012.

“The improvement in lot production in 2013/14 was underpinned by the emergence of pent up demand for new houses after the sustained period of low new dwelling activity following the GFC,” said Zigomanis.

“Cuts to interest rates have improved the affordability equation for Brisbane home buyers, while weak land prices over the last five years have also made new housing more attractive.”

Key driver: Net interstate migration expected to pick up with strong price growth in southern states to encourage some to look to Queensland. Deficiency of dwellings to remain.

Lot production forecast to continue to rise and peak at 9,000 lots per annum by 2015/2016. Lot sizes have failed to maintain affordability, but are larger on average than other capitals.