Despite $37 billion worth of new land being released in Australia’s eastern states in FY23, demand continues to outstrip supply, according to recently released data from PEXA.
Leveraging unique data from partner company, Informed Decisions, the ASX-listed digital property exchange platform’s 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.
While the release of greenfield land for new housing is one of the most important factors in addressing the affordability crisis, the report – which provides key insights into overall housing supply – reveals that settlements on new residential land fell across all three eastern states by 13.6% to 73,901 in FY23.
Each state posted sizable declines in volumes compared to FY22.
In addition to revealing a shortfall in land to keep up with demand for new housing in NSW and Queensland, the report also notes that it takes an average one year-plus to settle on a vacant block in Victoria.
Due to a steep rise in the cost of vacant blocks in all three states, courtesy of continued demand, the median in Greater Sydney is for the first time nearing the $500,000 mark. As a result, total settlement value across the three states fell slightly less than total volumes – by around 7.4% to $36.8 billion.
Given the imbalance between land supply and demand, the research finds that local government areas (LGAs) in NSW and Queensland 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.
Other noteworthy findings highlighted in the Residential Land Report include:
- 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%).
- 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 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.
- Greater Melbourne up 6.3% to $288,607.
- 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 include:
- Brisbane, Qld (5,035 units required).
- Blacktown, NSW (1,527 units required).
- Liverpool, NSW (1,135 units required).
- Camden, NSW (1,614 units required).
- Most greenfield LGAs in Victoria are meeting or close to meeting dwelling forecasts.
Freestanding homes are the preferred option
Given that building new freestanding homes in lower-priced less established suburbs, remains the preferred option for many Australians, PEXA Head of Research Mike Gill concludes that the country needs to either release more greenfield land or build more apartments in urban centres.
“We can’t rely solely on greenfield developments on our urban fringes to meet the housing demands of a growing Australia,” said Gill.
“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.”
