No relief as prices rise by the hour

Source: Herald Sun

Date: Saturday 7^th August 2010

Author: Craig Binnie

Land prices in growth areas rose a record $149 a day, or more than $1000 a week, in the June quarter, according to Oliver Hume Real Estate Group data.

The huge jump comes despite the proposed release of land that will be converted into more than 240,000 residential blocks.

“These are astounding increases, even in Melbourne’s rising property market,” Oliver Hume’s national research general manager Andrew Perkins says.

“Land prices are underpinning the price of house-and-land packages in Melbourne more than ever.

The cost of building is increasing slowly compared with the cost of land.”

Oliver Hume collates growth-area land sales data on a monthly basis.

An analysis of projects for sale in growth areas last quarter revealed the median land price rose $13,425 to a record high of $194,925 across Melbourne’s growth areas of Casey-Cardinia, Hume, Melton-Caroline Springs and Whittlesea.

Land prices in the March quarter rose at only $72 a day, or half the daily rise recorded in the June quarter.

The rises equate to growth of 4 per cent in the March quarter and 7 per cent in the June quarter.

Perkins says the price rises are being driven by owner-occupiers, not investors.

Almost 90 per cent of buyers were owner-occupiers in the June quarter.

He says the figures show the question of land affordability has not been solved and demand for land continues to rise faster than supply. However, a slowing in immigration may have a dampening effect on prices in the future.

Perkins says the rises show how seriously buyers need to take personal savings if they want to buy a home.

“Buyers can hardly afford to take long lunches with prices now rising at over $6 and hour and more that $1000 a week,” he says.