Residential land sales indicates a turnaround in the new home building sector looks likely in the second quarter of 2012, according to interpretations of the latest HIA-RP Data report.

The Residential Land Report found the volume of land sales increased by 18 per cent in the June 2011 quarter, but volumes were still 25 per cent lower than in the June quarter last year and 51 per cent lower than their June 2004 quarter peak.

The weighted median land value in Australia fell by 1.3 per cent in the June 2011 quarter to be 3.5 per cent higher than the comparable quarter in 2010.

The median value for capital cities was effectively flat in the June 2011 quarter at $214,656, 5 per cent higher than a year earlier.

The median value for Regional Australia fell by 3.7 per cent in the June 2011 quarter to $155,784, to be up by a bare 0.5 per cent on the June 2010 quarter.

"The profile for residential land sales remains weak, indicating that the earliest we can expect a turnaround in new housing starts is the March 2012 quarter," said HIA chief Economist, Harley Dale.

"It is encouraging that land sales have stopped falling, but there is a long road ahead to ensure a sustainable recovery in new home building to levels commensurate with the housing requirements of Australia's population," Dale said.

Encouraging signs

RP Data's national research director, Tim Lawless, said the improvement in land sales over the June quarter is an encouraging sign.

"The Australian vacant land market hit rock bottom during the December quarter last year with the following March quarter not that much better.

"The fact that land sales showed a marked improvement over the June quarter, a time when the RBA was still hinting at interest rates hikes, suggests land markets around the country are likely to continue showing an improvement in transaction volumes over the remainder of 2011.

"Since the June quarter we have seen an improvement in consumer sentiment and interest rates are expected to remain stable if not fall which should provide some momentum to the improving conditions."

"Land sales provide a solid leading indicator for future dwelling commencements.

"A further improvement in land sales over the September and December quarters will be warmly welcomed by the development and home building sectors which have felt the full brunt of the housing downturn," Lawless added.

Architecture & Design Team

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