By Herron Todd White
The vacant land market and construction industry throughout the south-west region of Western Australia has weakened over the past 24 months. Despite this, there are a high number of successful subdivisions across most of the major cities and towns in the region with some areas seeing more land releases and new sub-divisions coming on line.
Where is all this land? The south-west’s traditional land releases can be found in the Greater Bunbury regions such as Australind, Millbridge and Dalyellup. There is also land being released throughout the Greater Busselton area in Broadwater, Vasse, Dunsborough and Port Geographe. Margaret River also has a large vacant land release.
We have also seen some upturn in vacant land sales in the more outlying towns such as Bridgetown which can largely be attributed to the growth in the mining industries associated with those towns.
Price points for vacant land within the estates can vary quite significantly depending on location and block size. The entry point for outlying regions and suburbs is around $130,000 (for a 350 square metre block) however in the slightly more prestigious subdivisions such as Dunsborough Lakes, prices can reach up to $350,000 (700 square metre block with golf course views).
These variations are also visible when you start to talk about how value is stacking up in the market and it is all about location and perception. The areas that are currently considered value for money are largely in the Busselton Margaret River region because of their proximity to the sea change lifestyle, with pristine beaches, award-winning wineries and attractions on your doorstep.
While there are significant numbers of land subdivision areas, the south-west is also seeing larger green title lots located in close proximity to the town and beach being subdivided into smaller strata lots. This is also adding supply to the market.
Overall, the vacant land market has started to stabilise, with a reasonable balance between supply and demand.
The building industry is showing some signs of recovery as sales representatives are reporting an increase in sales volumes – a positive sign. Given the slow nature of the industry over recent years we have seen building costs reduce and currently in the south-west region it costs $1,000 to $1,100 per square metre for a basic project home and $1,300 to $1,500 per square metre for a quality project home. There are also a number of specialty builders in the region who will build your forever home in some of the prestigious locations in the south-west for anywhere up $3,000 to $4,000 per square metre.
In regard to value, we are seeing that cost does not equal value in outlying residential areas in Bunbury with sales of modern established homes coming in below the value of the land and the cost of the build. This is especially evident in the rural lifestyle market, with values being well below replacement costs.
This is not as obvious throughout the Busselton region, however, the gap between value and cost is starting to diminish. Margaret River does seem to buck this trend as purchasers are willing to pay a premium for an established product rather than build.
In conclusion, land + build does not always equal value, however when you consider the location and perception factors, the gap is closing.