House and land packages are getting more expensive in Adelaide.
House and land packages could soon be out of reach for many buyers, with prices for the once-affordable option now as high as ever.
Oliver Hume’s inaugural Land Index and Residential Outlook shows fierce demand for limited available lots continues to drive prices up.
With land clearance rates “extremely high” and available stock levels “very low”, coupled with ongoing infrastructure-related supply issues, the analysis found supply was likely to remain constrained over the next year.
“While lot price growth has been persistently high, this has led to new H&L (house and land) being relatively expensive compared to the local established market and has raised some affordability issues.”
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Strong demand for limited lots is driving land prices up across Adelaide.
Master Builders Association of South Australia chief executive Will Frogley said house and lands packages were always considered the affordable option but that was no longer the case.
“It’s as expensive as it ever has been,” he said.
“That’s why the State Government is throwing everything they can at their ‘housing roadmap’ and increasing supply.”
Mr Frogley said historically SA had been underdevelopment so when demand for housing boomed there wasn’t enough to go around.
“Now we’re trying to play catch up,” he said.
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Master Builders Association of South Australia chief economist Will Frogley. Picture: Kelly Barnes.
The Oliver Hume index, which is a comprehensive quarterly analysis that draws on decades of data and industry expertises to highlight opportunities and risks in Australia’s new land market, shows land price growth will remain high in Adelaide.
However, it is expected to soften as population growth slows and volumes hold stable because of easing demand and ongoing supply challenges.
Adelaide was assigned a benchmark score of 6.5 on the index – which considers the state of national land markets and the residential market outlook then ranks them, with scores above 5 indicating above trend conditions.
The city’s median land value hit $371,000 by December.
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Oliver Hume chief economist Matt Bell. Picture: Supplied.
While the lowest median of the country’s five major city markets, its growth is among the highest – climbing 6 per cent in the December quarter and 26.8 per cent over the year.
There were 550 sales in the last three months of the year, which was down 8.9 per cent on the previous quarter but up 29 per cent over the year.
Oliver Hume chief economist Matt Bell said Adelaide’s market had been supply constrained for a while so volumes hadn’t changed much, but land prices were strong and cancellation rates were low.
“We do expect that price growth to moderate and volumes to stay about where they are just because it can’t get enough to market,” he said.
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