Residential sales volumes are falling across the country, although median values continue to increase, according to figures from the Residential
During the quarter, the volume of land sales nationally was 40 per cent below the same period during 2009 while values rose by 4.9 per cent and are up by 5.9 per cent over the year.
Looking specifically at Brisbane, where the residential property markets performance has been quite different, both volumes and prices are falling. During the December 2010 quarter, land prices were 1.9 per cent lower than at the same time last year, however they did increase by 2 per cent over the quarter.
The median land price in Brisbane is $202,000.
During the quarter, the average Brisbane lot size was 300 square meters. Only Hobart (683sqm) had a larger average lot size among capital cities.
Based on the median price and average lot size, the average rate per square meter for land within Brisbane was $337 during the quarter.
Median lot prices within Brisbane peaked at $218,000 during the June and September quarters of 2009.
With the median price now recorded at $202,000 it indicates that median land prices have fallen by 7.3 per cent since peaking.
In line with the softening vacant land market, a similar result was recorded for houses and units.
Over the 12 months to December 2010, Brisbane house values had fallen by 1.1 per cent and unit values were down by 0.3 per cent. Further highlighting that the market has well and truly slowed, the number of dwelling sales is down 36 per cent on the five-year average.
As at December 2010, Brisbane house values were 2.6 per cent below their peak and unit values were 2.2 per cent lower.
Across southeast Queensland there was a similar story. At both Gold and Sunshine Coasts, land prices are more expensive than Brisbane, however both have recorded a greater slump in land sales than recorded in Brisbane.
On the Gold Coast, the median land price is $234,500 and sales volumes for the six months to December 2010 were 61 per cent lower than during the previous year.
It was a similar story on the Sunshine Coast. With a median land price of $240,000, sales volumes were 68 per cent lower over the most recent six months than they were during the previous year. Sunshine Coast and the Gold Coast are the two most expensive non-capital city housing markets in Australia.
Clearly housing affordability in southeast Queensland has been stretched and many buyers are simply no longer in a position to enter the market. This will be a major challenge for the market during the next few years.
Interest rates are likely to increase before they fall, making it even more difficult for buyers to enter the market.
The high interest charges also have an impact on the supply of new housing, whether it be medium and high-density developments or land projects. the result will be limited growth in property values over the next few years with rental pressures increasing and the rate of rental growth increasing as competition for rental properties in quality locations intensifies.
Although we dont anticipate a collapse in prices, we are already seeing some falls.
I expect that over the next few years the correction will likely occur in the form of fairly flat conditions making housing more affordable as the rate of inflation and wages growth runs at a level higher than property value growth.
Although those that have purchased homes and investment properties wont be particularly happy about these conditions, over time it will result in making purchasing property a more attractive prospect.
