New Residential Land Report looks at land released across Australia’s Eastern States in FY23
NSW and Queensland are falling short when it comes to releasing enough land to keep up with demand for new housing, while it takes an average of more than a year to settle on a vacant block in Victoria, according to the first comprehensive analysis of the release of new land for residential housing.
With the release of greenfield land for new housing one of the most important factors for addressing the affordability crisis, research published today by PEXA and Informed Decisions (.id) reveals that settlements on new residential land fell across all three eastern states to 73,901 in FY23, a fall of 13.6%.
At the same time, continued demand has resulted in a steep rise in the cost of vacant blocks in all three states, with the median in Greater Sydney closing in on $500,000 for the first time. This meant the total value of settlements across the three states fell slightly less than total volumes – about 7.4% to $36.8 billion.
Given the imbalance between land supply and demand, the research finds that LGAs in NSW and Queensland would need to build thousands of new units to meet forecast demand in the next five years, with only Victoria currently releasing enough new land to meet dwelling growth over the next five years
The inaugural Residential Land Report analysed the latest trends in the settlement of vacant greenfield land for low-density dwellings across the eastern states of NSW, Queensland and Victoria over the three-year period from July 2020 to June 2023. The report looked at volume and time from sale to settlement, revealing how efficiently land is being delivered to market to meet demand.
To provide greater insights, PEXA partnered with .id (part of the PEXA Group) to include its demographic and population forecast data. .id has more than 25 years of experience converting national demographic, housing and economic trends into information that can support local planning and decision-making.
PEXA's Residential Land Report Key Findings
- Total vacant land settlements in the three states contracted 13.6% to 73,901 in FY23, with each state posting sizable declines in volumes compared to FY22.
- Average days from settlement were highest in Victoria, increasing to 385 days in FY23, up from 243 days in FY22. NSW and Queensland were quicker to release land, with buyers waiting an average 275 days and 156 days respectively.
- Victoria excelled at delivering high volumes of new vacant residential land relative to other states, with 33,847 settlements in FY23 (down 10.1%) representing nearly one in five settlements in the state.
- Queensland was successful in delivering land to market, with 24,226 vacant land settlements in FY23 (down 16.2%). However, the land released in many key greenfield LGAs, particularly in fast-growing Southeast Queensland, was below forecast dwelling growth.
- NSW experienced the weakest new land supply, with just 15,828 vacant land settlements recorded in FY23 (down 16.4%), well below forecast dwelling growth.
- Settlement values for vacant land increased in all eastern states as volumes tightened, with new blocks in Greater Sydney up 13.5% to an average of $489,764, new blocks in Greater Melbourne up 6.3% to $288,607 and new blocks in Greater Brisbane up 9.4% to $248,295.
- The greenfield LGAs with the greatest need for more medium to high density housing in the next five years are Brisbane in Queensland (5,035 units required) and Blacktown (1,527), Liverpool (1,135) and Camden (1,614) in NSW. Most greenfield LGAs in Victoria are meeting or close to meeting dwelling forecasts.
PEXA Head of Research, Mike Gill, said: “Building a new home in a greenfield housing estate remains the preferred option for many Australians, particularly families and first homebuyers. They are drawn to the lower prices compared to established suburbs and the ability to build a large, new, freestanding home to their own specifications. That’s why this analysis is so valuable as we seek solutions to address the nation’s housing affordability crisis.
“Vacant residential land settlements data like the Residential Land Report provides insights into overall housing supply as well as the underlying direction and magnitude of population growth in urban and regional centres. Our report also looks at the council areas that led the way in releasing land for sale, both in terms of volume and time from sale to settlement.
“This is important for determining whether we are releasing enough land, if we’re releasing it in the right areas and if we’re releasing it fast enough. The clear conclusion we can draw from the latest data is that there is a lot of room for improvement if we are going to meet the demands of a growing population – either by releasing more greenfield land or accepting that we will need to build more apartments in our urban centres.
Mr Gill said the report, which is the first of its kind, leverages the unique data of PEXA Group’s 100%-owned .id (Informed Decisions) business to provide a balanced and realistic view of when and where growth in both population and housing will occur in the future. It compares FY23 volumes of vacant land settlements with annual dwelling growth forecasts.
“Our partners at .id forecast housing demand from population growth, accounting for demographic factors such as high levels of overseas migration and declining fertility rates and reconcile that with forecast supply of dwellings (a combination of current housing stock and the pipeline of future development). By combining our datasets, we have been able to explore whether current levels of new land supply is keeping with population growth in our greenfield corridors.
“What this report highlights is that we can’t rely solely on greenfield developments on our urban fringes to meet the housing demands of a growing Australia. People want to live in cities for access to education and employment, and it’s our cities that are best placed to deliver these services, as opposed to creating new and disconnected communities on our cities’ fringes,” he said.
Ivan Motley, Founder of .id, said: “Densification in our established urban areas is a necessary part of the housing mix if we are to meet the demands of Australia’s forecast population growth with the supply of affordable and appropriate housing, infrastructure and services that create well-supported and integrated communities.
“We’ve been working with governments and organisations in the private sector for over 25 years to help them understand and plan for the nuances of our local communities and how they are changing. In the post pandemic era, the role our cities play as the epicentre of housing supply and demand is more important than ever, and we are working with public and private sector organisations to help them plan for the unique needs of different local areas over the next quarter century,” he said.
.id (Informed Decisions) is set to unveil its new national forecasting data suite via a virtual event titled, ‘A return to the cities’ on the 24th October, addressing the role our cities play as the epicentres of housing supply and demand over the next quarter century. For more information or to attend this free event, please register here.
-ENDS-
For further commentary or information, please contact:
Danielle Tricarico – Head of Corporate Affairs, PEXA Group
E: Danielle.tricarico@pexa.com.au
M: 0403 688 980
About PEXA
PEXA is a world-leading ASX-listed digital property exchange platform and property insights solutions business. Since 2014, PEXA has facilitated more than 16 million property settlements through the PEXA Exchange in Australia, with 88% market reach, and in 2022 PEXA launched in the UK.
The PEXA Group of companies, including .id (Informed Decisions), Value Australia and Land Insight, delivers digital insights and property solutions that help government, financial institutions, banks and property practitioners to unlock the future value of property.
About .id (Informed Decision)
.id is a wholly owned subsidiary of the PEXA Group with more than 25 years’ experience converting national demographic, housing and economic trends into local stories. As Australia’s leading provider of tools and consulting services to support local area decision making, .id works with clients including local and state governments, education providers, housing developers, retailers, health care providers, utilities companies, banks & insurers, sporting organisations and planning consultants, to enable more informed location-based planning decisions.
