Strong recovery in demand for residential land anticipated in Sydney and Perth fringes: BIS Shrapnel

By Larry Schlesinger
Monday, 26 November 2012

After a “period of protracted weakness” a strong recovery in demand for residential land on the fringes of Sydney and Perth is being tipped by forecasters at BIS Shrapnel.

To meet this rising demand, BIS Shrapnel expects annual residential lot production in outer Sydney to more than double over the next five years from an average of 2,809 lots produced annually from 2007 to 2012 to 5,870 lots annually from 2012 to 2017.

Last week developer Devine announced its first return to the Sydney market in nine years, with plans for an apartment development in Turramurra.

A strong recovery is also anticipated for the outskirts of Perth, with residential lot production expected to rise from an average of 7,633 lots produced annually from 2007 to 2012 to 11,280 lots produced annually between 2012 and 2017.

A strong recovery is also tipped for the Gold Coast with smaller improvements on the Sunshine Coast and outer Brisbane.

Recent and Forecast Lot Production

*City/region*	*Average lots produced annually*
	*2007-2012*	2012-2017 forecast
Outer Sydney	2,809	5,870
Outer Melbourne	16,917	12,340
Outer Brisbane	5,372	5,560
Gold Coast	1,494	2,280
Sunshine Coast	1,652	1,820
Outer Adelaide	2,962	2,320
Outer Perth (includes Mandurah)	7,633	11,280

Source: BIS Shrapnel

“The recent protracted weakness in the Sydney, Perth and Brisbane markets – and to a lesser extent the Gold Coast and Sunshine Coast markets – has created the conditions for an upturn,” says report series author and senior manager Angie Zigomanis.

“Low new dwelling construction has resulted in a rising underlying dwelling deficiency, while affordability has improved considerably due to the combination of the weakness in house and land prices and lower interest rates.”

In its third-quarter update released earlier this month, residential developer Australand notes that conditions remaining challenging in south-east Queensland but says activity is more positive in Sydney and Perth with it making good progress on sales targets.

While Australand says the market softened in the third quarter resulting in weaker sales “particularly for land in Melbourne’s growth corridors” it says the Sydney market continues to display “resilience supported by an ongoing structural undersupply of median-priced product”.